We have compiled a summary of the impacts of the 2014 Federal Budget. If you want to minimise your tax obligations or learn more about the budget then make an appointment today.
The Medicare levy will increase from 1.5% to 2%
From 1 July 2014 if the taxable income for families is more than $34,367 or for individuals more than $20,542, the taxpayers will be charged 2%, instead of 1.5% Medicare levy.
There will be a 2% deficit levy and 49% marginal tax rate for incomes over $180,000
From 1 July 2014 the temporary “budget deficit levy” will apply at 2% for income over $180,000 and this levy is scheduled for three years.
For example, an individual with a taxable income $200,000 will pay 2% of $200,000, i.e. $4,000 levy. For this group of 400,000 taxpayers, the marginal tax rate will increase from 45% to 47%, including the Medicare levy as mentioned in the first point and deficit levy. The fringe benefit tax rate will also increase from 47% to 49% accordingly.
Family tax benefit changes are being frozen for two years and the scale is changing
The government will freeze the current family tax benefit payment rates for two years from the next financial year.
From 1 July 2015 the family tax benefit scale is changing. The income limit for primary earners will lower from $150,000 to $100,000 for families whose youngest child is less than 6 years old.
Most dependant offsets to be abolished
From 1 July 2014 the government will abolish nearly all the dependant tax offsets, including spouse, housekeeper, and mature worker tax offset.