Treasurer Wayne Swan handed down his sixth (and arguably) last Federal Budget yesterday, outlining a $60 billion revenue shortfall compared with projections made a year ago.
We’ve reviewed the Budget papers and prepared an overview of proposed key changes that will impact on salary packaging. Fortunately, the list is a short one.
Increase in Medicare Levy – The Medicare Levy will increase to 2% (currently 1.5%) effective 1 July 2014. The increase in Medicare Levy will be used to fund a national disability insurance scheme.
Withdrawal of Income Tax Rates reduction – A decrease to personal income tax which would have applied from the 1 July 2015 will not proceed.
Increase to Fringe Benefits Tax (FBT) rate – The FBT rate will increase to 47 percent from the 1 July 2014. This will bring the FBT gross-up rates to 2.0802 where an employer is entitled to a GST credit and to 1.8868 where an employer is not entitled to a GST credit.
Work-related Self Education Expenses to be capped – Self education expenses incurred by an employee under a salary sacrifice arrangement will be capped at $2000 per annum from the 1 July 2014
4. Superannuation changes – The concessional contributions limit will increase from $25,000 to $35,000 from 1 July 2013 for people aged over 60. The age limit will decrease from 1 July 2014 to include those aged over 50. For individuals earning over $300,000 per annum, the 15 percent tax on concessional contributions will increase to 30 percent.
For further information on salary packaging, please contact Simplygreen Salary Packaging on 1300 664 323.