|The Concise Summary
A concise summary of the major budget implications including super changes, impacts for retirees and small to medium enterprise.
|How the Budget May Affect Retirees & Pre-Retirees
The Turnbull government’s first Budget included a number of super changes that may affect retirees and pre-retirees but no material changes to the Age Pension or Aged Care.
Super changes contained in the Budget include a $25,000 annual cap on concessional super contributions; a new lifetime cap of $500,000 on non-concessional contributions; and the removal of the 10 per cent test for personal tax deductible super contributions which will allow all individuals up to age 75, regardless of their employment situation, to make concessional super contributions.
|How The Budget May Affect Workers, Wealth Builders, Women And Families
While medium and high income earners stand to benefit from a modest tax cut for workers earning over $80,000, many of the super tax concessions for higher income earners will be scaled back. To prevent approximately 300,000 middle income earners from creeping into the second highest tax bracket due to wage inflation, the threshold over which income is taxed at 37c in the dollar will increase from $80,000 to $87,000 from 2016/17. There will be no personal tax relief for people earning under $80,000.
|What The Budget Means For Small And Medium Businesses
Small businesses are big winners in this year’s Budget, under the government’s proposed “10-year enterprise tax plan” designed to boost growth, create jobs and drive Australia’s future economic prosperity.
Proposed changes will see the company tax rate fall to 25 per cent over the next ten years while the small business entity turnover threshold will increase from $2 million to $10 million from 1 July, 2016.
The current $2 million turnover threshold will be retained for access to the small business capital gains tax concessions.
|Budget Implications For High Net Worth Individuals And Families
This year’s Budget may have significance for wealthy Australians with many of the super tax concessions for high income earners scaled back.
While the government kept its promise to leave negative gearing and capital gains tax alone, it reduced access to generous super tax concessions for the most wealthy by introducing a super transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase, extending the 30 per cent tax on concessional super contributions to those with income of $250,000 (currently $300,000) and lowering the annual cap on concessional super contributions to $25,000.