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 1^st 2009.

-          Reduction of the Superannuation Co-contribution to $1 per $1 of eligible personal contributions up to a maximum of $1,000.  Effective 1^st July 2009 until 30^th 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 20^th 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 30^th September and then be wound back by $3,500 for existing home purchases and $7,000 for building a new home up until the 31^st 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 13^th December 2008 to 31^st December 2009 as long as the equipment is installed by 31^st December 2010.

-          Previously announced income tax cuts left untouched.

Regards,

Scott Keefer