A ‘mixed bag’ is the only way we can describe this year’s Budget for individuals. Families, pensioners, workers and others will benefit from familiarising themselves with the changes so they can be best positioned when making their next move.
As with any Budget, these measures are subject to Senate approval before becoming law. We will update you as soon as each measure is enacted.
Those Using a Personal Car for Work
If you claim use of your car for work as a deduction, there is a shake up to these rules. No longer will you be able to claim up to 77 cents per kilometre, 12% of the original value of the vehicle or 1/3 of actual expenses. The new method will be a flat rate of 66 cents per kilometre regardless of the type of vehicle. If you use a larger vehicle you will likely lose out, however if you have a smaller ride you are likely to be better off.
Those Looking to Start a Business
If you’ve always wanted to venture out on your own, the professional costs involved with setting up a business, including legal and accounting, will become immediately deductible rather than written off over 5 years. Coupled with the small business tax cuts and $20K write off, there is perhaps no better time to start a business than now.
Both older and younger workers will benefit from this Budget. For younger workers, the Budget includes an incentive to businesses to employ young people with up to $6,500 in wage subsidies over 12 months. Employers of job seekers over 50 will be able to access the wage subsidy payments of up to $10,000 over a 12 month period rather than 2 years as proposed in last year’s Budget.
Parents of Children in Childcare
New subsidies based on the percentage of the actual fee paid up to an hourly cap ($11.55 for day care) will replace the current system. This will help parents better afford childcare, as families earning up to $65,000 will receive a subsidy of 85% and families earning above $170,000 set to receive a 50% subsidy.
Those taking Parental Leave pay from the Government and their employer will no longer be eligible to receive the Government payment from 1 July 2016. This may reduce the amount of time new parents are able to spend at home with newborns, meaning they need to go back to work earlier and will be accessing the improved childcare payments sooner rather than later.
Another ‘mixed bag’ is the change to pensions, with those on part pensions receiving an increase of $30 per fortnight whilst other pensioners face losing payments altogether. The number of individuals eligible for the pension is also likely to change, with the value of assets a pensioner can have (in addition to the family home) while still receiving the full pension rising from $202,000 to $250,000 for singles and $286,000 to $375,000 for couples.
However part pensioners who own more than $823,000 in assets as a couple (in addition to the family home) will no longer qualify for the pension. This level is down from $1.15M. For singles, the threshold will drop from $775,000 to $547,000. These changes will come into effect on 1 January 2017 should they pass through Parliament.
As a small win, those no longer eligible for the pension will still be entitled to a Commonwealth Seniors Card or Health Card.