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2015 Federal Budget

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!!!

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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.



21/05/2015 7 comments
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Federal Budget 2014

Ok if the 2014 Federal Budget was all a bunch of gobbledy gook to you then do not worry you are certainly not the only one!!!!  Here is my take on what you really need to know about what was announced in the Budget and how it will impact you and your family!

  • If you get the Family Tax Benefit part B the rules have changed.  Only Families on a income of less $100,000 with children under six qualify.  Though existing recipients of Part B with children six or older will continue to receive payments for two years.
  • Planning to have a baby?  The new paid maternity scheme to start in July 2015 will have scheme payments capped at a payment of $50,000, as opposed the originally promised $75,000.
  • Going to the Doctor will cost you more:  Anyone who sees a doctor and gets bulk billed will pay $7 every time they go.  Non-bulk-billed patients will pay an extra $5 per visit.  Children under the age of 16 and concession card holders will have the payment capped at 10 visits.
  • You will pay more for medicines:  Medication covered under the Pharmaceutical Benefits Scheme (PBS) will increase by $5 and PBS safety net thresholds will kick in only after increased out-of-pocket expenses.  Concession card holders will pay 80c more for PBS medicine, and spend an extra $61.80 before the safety net kicks in.
  • Petrol Prices will rise:  The government will raise the petrol tax (fuel excise) twice per year in line with inflation.
  • Compulsory employer super contributions to pause at 9.5% for three years.  They are currently at 9.25%, so will go up once more in July 2014.  The previous plan was to increase them to 12% by 2019.
  • Pension age has increased to 70 for anyone currently under 50.
  • First Home Saver Accounts (FHSA) have been axed.  No more new accounts can be opened and as of July 1 the government will end its 17 per cent co-contribution.  In July 2015 the tax and social security concessions associated with the scheme will be withdrawn and the restrictions on withdrawals will be removed.
  • If you work for the public service, there are plans to cut 16,500 public service jobs.
  • Those earning over $180,000 will pay an extra 2% per annum tax for the next three years, this is the “Budget Repair Levy”.
  • For those with kids at university or thinking of going:  Our children will have more debt and start paying it back sooner.  Universities will have the ability to set their own fees, so prices will most likely rise. Scholarships will be available to disadvantaged students.  From July 2016, students will have to pay their loans back sooner, starting once they earn over $50,638 a year.
  • For the unemployed:  Those aged under 25 will need to “earn or learn”. People under 30 will need to wait six months to be eligible for Newstart and once on payments will be subject to a work for the dole scheme.

So there it is and it was a tough one!!!!  Of course there was lots more bits and pieces, but these are the essentials that I think could have the greatest impact on your family.

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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.

16/05/2014 15 comments
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After spending a cosy night on the couch with a glass of wine and Mr Swan on the telly, the budget turned out to be a bit of a non event.  As with most budgets most of the unpalatable stuff had already been leaked and interestingly there was none of the major vote grabbing hand outs that you would expect from a government facing an election in four months time.  The fastest summary I can give from a family point of view is, baby bonus scrapped, Medicare Levy up and wave good bye to your promised tax cuts.  Oh and if you are a smoker the cost of your cigarettes will increase too.  So here is the low down on some of the things I think you really need to know from the Budget….

(1) Baby Bonus Scrapped

So let’s start with probably the most controversial policy change from a family point of view the scrapping of the baby bonus.  Under the previous scheme, stay-at-home mothers in families with incomes of up to $150,000 received a $5000 payment on the birth or adoption of their first child and $3000 for each subsequent child.  The scheme will now be changed to the much lower amounts of $2000 for the birth or adoption of a first child or each child in multiple births, and $1000 for second or subsequent children. Also, the threshold income below which you can qualify for the scheme will drop considerably to $101,000 gross income per couple from $150,000.  The threshold for a second baby will be about $112,000.  Under the new scheme, families will receive an initial payment of $500, with the rest to be paid in seven fortnightly instalments.  The old baby bonus scheme will be scrapped from March 1st, 2014.  So if you want to claim you had better get moving 🙂

(2) Minor Changes To Paid Parental Leave Means Better Access For Those Having Another Child

Under the current scheme women must work for 10 of the previous 13 months to qualify for the government’s paid parental leave. Post the Budget, parents can include time on the government-paid parental scheme as work if it occurs in the previous 13 months for a subsequent child.  This move broadens the definition of the work test and means that more women will be able to access government paid parental leave when they have another baby.  By the way, its handy to know that employer funded parental leave can already be included as part of the work test, where it occurs in the previous 13 months.

(3) Other Changes to Family Payments

The government will freeze the upper income test limit of $150,000 for the dependency tax offsets, Family Tax Benefit Part B, the Paid Parental Leave Scheme and Dad and Partner Pay for the next three years.  Also, those of you with teenagers the government will stop paying the Family Tax Benefit Part A at the end of the calendar year in which your teenager completes school. The government are also reducing the time in which families have to claim their Family Tax Benefit entitlement or Child Care Rebate from two years to one.  So it definitely pays to get on top of these things early and not wait too long or you might miss out!

(4) Kiss goodbye to your promised tax cuts

We had been promised tax cuts that were going to come into effect on the July 1 2015 but these are now no longer going to happen.  My understanding is they were to help out with the increase in costs associated with the Carbon Tax.  Supposedly the tax cuts have been deferred but that is most likely political speak for “never going to happen”.

(5) Medicare Levy increased from 1.5% to 2%

From July 1 2014 it is proposed that the Medicare levy increase from 1.5% to 2% to fund DisabilityCare, the Government’s national disability insurance scheme.  It is estimated that, on an income of $50,000 per year this increase will be an extra $250 in levy, on $75,000 it works out to be an extra $375 and on $100,000 per annum the increase adds an extra $500 to your Medicare Levy.  No doubt most will agree that the increase in the levy is going to an area in desperate need of funding and long over looked by both sides of the political spectrum.

Of course, there were many more things announced but I think the ones outlined above are some of the most important for Australian families.   As we are facing an election later this year, all of these changes are only proposed and if the coalition gain power it is highly likely that some of these measures will be changed.  I will keep you informed!

Happy Investing!

Money Mummy

* Please note this is for your general information only and does not constitute financial advice.

15/05/2013 2 comments
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