Every year Iput together a summary of the major items from the Federal Budget that may impact on the personal finances of our clients. The Budget presented last week by Wayne Swan provided a number of significant financial planning changes which have been outlined in this summary.
We have posted a summary on our website and encourage anyone with questions regarding the details to get in contact. The following is a brief summary of the major points. For more details please click on the link to the full summary - 2009 Budget - Personal Finance Summary.
A copy was also sent out to subscribers of our email newsletter the day after the budget was delivered. Please click on the following link to take a look at a copy of this email - Email Newsletter Budget Summary.
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The budget has provided a number of significant financial planning changes which have been outlined in this summary. Some readers will not be interested in all of the details so I start with a brief summary of the major changes introduced:
- Reduction of Tax Deductible Contributions to Superannuation from $50,000 to $25,000 for those under 50 years old and from $100,000 to $50,000 for those aged 50 and older. Effective July 1st 2009.
- Reduction of the Superannuation Co-contribution to $1 per $1 of eligible personal contributions up to a maximum of $1,000. Effective 1st July 2009 until 30th June 2012 (3 years) and then increasing to $1.25 per $1 of eligible personal contributions up to a maximum of $1,250.
- Continuation of the 2008-09 drawdown relief for superannuation pensions through 2009-10 reducing the minimum draw down rates by 50%.
- Single Age Pension rate to increase by $32.49 per week with the Combined Couple Age Pension rate to increase by $10.14 per week.
- Increase in the Age Pension income test taper from 40 to 50 cents in the dollar for a single pensioner and 20 to 25 cents in the dollar for each member of a couple.
- No new entrants to the Pension Bonus Scheme from the 20th of September 2009. Replaced in some way by the Work Bonus for pensioners which will leave exempt from the Income Test half of the first $500 of fortnightly income.
- Qualifying age for Age Pension to increase to 67 by 2023.
- Increase in the Senior Concession allowance for singles by $129 per annum.
- Introduction of a new carer's supplement, $600 per annum to all Carer Allowance recipients for each person being cared for, $600 per annum to all Carer Payment recipients.
- Commonwealth Senior's Health Card income test will not be amended to include gross tax-free superannuation pension income however it will include income which has been salary sacrificed to superannuation.
- First Home Owners Boost to continue as is until the 30th September and then be wound back by $3,500 for existing home purchases and $7,000 for building a new home up until the 31st December 2009.
- Introduction of paid parental leave for up to 18 weeks at the Federal Minimum Wage - currently $543.78 per week.
- Introduction of new Private Health Insurance Incentive Tiers with existing arrangements remaining unchanged for singles earning less than $75,000 and families earning less than $150,000 per year.
- Increase in the Small Business Tax Break from 30% to 50% of eligible purchases from 13th December 2008 to 31st December 2009 as long as the equipment is installed by 31st December 2010.
- Previously announced income tax cuts left untouched.