What Does The 2016 Federal Budget Mean For Australians?

“Mr Speaker, this cannot be just another budget, because these are extraordinary times. This budget is an economic plan - it's not just another budget”. Opening his speech with these words on Tuesday 3^rd May, 2016, Treasurer Scott Morrison proceeded to hand down his first Federal Budget, one focused on “jobs and growth”. So, how might the Turnbull Government’s budget impact ordinary Australians? Here are the key proposals. Even though they must be passed by Parliament before they become law, they’re most definitely worth considering in regards to everyday life today and into the future. Employment & Education…

• Launch a new employment package, which includes the Youth Jobs PaTH (Prepare-Trial-Hire) internship program. Job seekers will work 15 to 25 hours per week for one to three months, during which the Government will bolster their regular income support payment with an extra $200 per fortnight.

• Increase the personal income tax threshold before the 37% personal marginal tax rate is applicable from $80,000 to $87,000 (the 32.5% tax rate will apply up to $87,000) from 1^st July, 2016.

• Inject an additional $1.2 billion into school funding.

Families…

• Activate a tax offset for superannuation contributions made to a spouse where they earn up to $40,000 per annum (income threshold is currently $10,800).

• Previously promised childcare subsidies delayed until 2018, one year later than scheduled, pending the approval of cuts to family benefits.

Retirement…

• Lower the super concessional contribution cap to $25,000 (from $35,000) per annum from 1^st July, 2017. However, if one’s superannuation balance is less than $500,000, they’ll be able to roll forward any unused caps after 1^st July, 2017 for up to 5 years.

• Introduce a $500,000 lifetime cap for non-concessional (after-tax) super contributions effective immediately.

• Implement a cap on super balances of $1.6 million and above, restricting contributions to super funds moving forward.

• Decrease the income threshold from $300,000 to $250,000, meaning higher income earners will be taxed at 30% for any extra super contributions over $25,000.

Health…

• Spend $29 billion extra in health funding for public hospital service.

• Put into effect four annual 12.5% increases in tobacco excise, starting from 1^st September, 2017; this is forecast to improve tax revenue by $4.7 billion over the next four years.

• Increase the income thresholds before the Medicare levy is applicable:
  • For singles, increase to $21,335.
  • For couples with no children, increase to $36,001.
  • For senior and pensioner couples with no children, increase to $46,966.
  • For couples with kids, increase to $3,306 for each dependent child/student.

Transport/Infrastructure…

• Mobilise a $50 billion national infrastructure plan to support growth.

Business…

• Drop the small business tax rate from 28.5% to 27.5% for companies with a turnover less than $10 million (from 1^st July, 2016).

• Cut the company tax rate from 30% to 25% phased over 10 years.

Understanding the impact the proposals contained within the 2016 Federal Budget will potentially have is important to you and your future. Take the time to consider them. If you have a financial adviser or planner already, then they will be able to answer any questions that you may also have. They will be most certainly also make sure that you are making the most of these changes.   If you do not already have a financial adviser and are looking for one, then don’t hesitate to engage the expertise of one today. You can contact moneysoft by emailing us at support@moneysoft.com.au should you require any help to find an adviser.    

Posted 9 years ago 3 Minute(s) to read