Before we all get too excited about the announcements made in the budget, let’s remember that everything reported are proposals that need to successfully pass through Parliament before they become law. And often that means being subject to changes throughout the process. But there are bits of good news.
Let’s take a look at some of the promises the Treasurer has made in the Budget for 2018/2019
Superannuation
In a long overdue change, the number of members of an SMSF (Self Managed Superannuation Fund) will increase from four to six. The government claims this will “give more flexibility for larger families”.
Given the frequency and impact of recent budgets, there was very little on the superannuation front this year.
One good policy announcement was the opportunity for ‘recent retirees’ aged 65-74 being able to contribute to super without meeting the work test. This should make it easier for people to top up their super prior to their retirement.
Another plus (though not sure how this impacts government revenue and can form part of a budget?) is that super funds will be banned from charging exit fees. This is good news.
Tax Cut
From as early as 1 July this year tax relief for low to middle income earners will kick in.
Here is a summary of the increase in take home pay an indivudual can expect from 1 July onwards:
| $60k | $80k | $100k | $150k | $250k | |
| Tax savings per year
(Assumes, single + no children) |
+$530 | +$530 | +$515 | +$135 | +$135 |
Source: abc.net.au
Plus the Medicare Levy will remain at 2% and won’t be increased to 2.5% as proposed in the Budget last year.
Pensioners
Age Pensioners will be able to earn up to $1,300 pa more and still qualify for the full Age Pension. This means an individual can earn up to $7,800 pa and receive the full Age Pension.
And if you’ve felt the wrath of the Centrelink call wait queue (we sure have), the government is allocating $50 million to help reduce waiting times.
Baby Boomers
If you’re aged over 50 years, the government is encouraging you to re-enter the workforce and combat age discrimination by giving prospective employers a $10,000 wage subsidy.
Small Businesses
Small businesses with turnover less than $10 million will get an extension (originally due to end 30 June 2018), of the immediate tax deduction for assets costing up to $20,000 to 2018-19.
Overall it was a fairly conservative, measured budget that forecasts the nation will back to a surplus (and no longer adding to our national debt) by 2020-21. Let’s hope the future estimates are right, as borrowing money indefinitely is not sustainable.
If you have any questions about how the budget might impact you, please contact us.
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Disclaimer: This post has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions. Align Financial | Financial Planner Northern Beaches | Servicing North Narrabeen, Narrabeen, Mona Vale, Elanora Heights, Newport, Avalon, Palm Beach | Enquire with us online.