Despite being tamer than last year, the 2015 was a real mixed bag for families. If all the measures pass the Senate some families will be better off others worse off. So here are the 5 main proposed budget changes that you really need to know about.!
(1) If you have a child in childcare – there are big changes you need to know about.
From 1 July 2017, a new Jobs for Families childcare package is expected to come online and replace the Child Care Benefit and Child Care Rebate with a single child care subsidy. This subsidy will be paid directly to child care providers, reducing upfront fees.
The government estimates that the changes will save working families $30 per week on average. Families with an income of under $65,000 per year are guaranteed a minimum of 12 hours subsidised child care per week with 85% of their child care costs covered, up to an hourly cap. The subsidy gradually tapers to 50 per cent for families earning around $170,000 or more. There will be no annual cap for families earning less than around $185,000. Families earning around $185,000 or more will have a $10,000 annual cap on the total amount of assistance provided per child per year. This is $2,500 more than the current Child Care Rebate annual cap per child.
However, the catch is that the amount of subsidy that each family receives is going to be subject to an “activity test” that is tied to the amount of paid work, study or volunteering that the primary carer does. The primary carer must perform a minimum of eight hours work or study per fortnight to receive any child care support. The more hours worked the higher the subsidy will be.
Given the above “activity” test the big losers from this reform are families with a stay at home parent. If their family income is between $65,000 to $170,000 per year income bracket will lose the Child Care Benefit that they are currently entitled to, with no compensation under the new system. These families will have to pay the full cost of child care without any government subsidy
(2) There will be a limited nanny trial
If you have a combined income of less than $250,000 and find it difficult to access mainstream childcare services – because you would shift work, or are in a rural or remote area or are a parent of a child with special needs – you will be eligible to use your childcare subsidies on in-home nannies. Payments will be paid directly to the childcare provider.
(3) If you receive Family Tax Benefit payments there are several changes you need to know…
As of July 1, families where one parent earns more than $100,000 will no longer be eligible for Family Tax Benefit B. This is one of the few changes from last year’s budget that has actually passed the Senate.
However, to fund the new childcare measures the government is looking to enact some other changes including:
- Restricting the Family Tax Benefit B to families with children under six. To help single-parent families receiving Family Tax Benefit A and no longer eligible for Family Tax Benefit B there will be an additional annual payment of $750 for each child aged between six and 12.
- Freezing the indexation on both the Family Tax Benefit A and B for two years ie. the benefit won’t go up with inflation.
- Also the large family supplement which is paid to those with 4 or more children will be cancelled.
(4) If you’re planning to have a baby… you could be worse off than under the current system.
If you receive paid parental leave through your employer you will no longer be eligible to receive the government funded scheme which is worth a maximum of $11,538.90.
(5) If you run a small business you could be a big beneficiary.
The government has announced a $20,000 limit for immediate asset write-offs for small businesses with annual turnover less than $2 million from 1 July 2015.
Lots of these measures will have to pass the hostile senate and as we know now, lots of the things that were announced in last year’s budget simply did not make it through. So, what the budget actually means for families could be completely different story when the political process is finished, so I will let you know how actually things go!!!
If you liked this you might also like:
If you would like to read more from me don’t forget to sign up to my weekly email using the form below:
The information contained in this post is general in nature and does not constitute financial advice. Please see your financial advisor for advice specific to your individual circumstances.