Taxing times: Federal Budget 2014-2015

How could the Federal Budget affect your household finances?

The lead-up to the Federal Budget was dominated by talk of cutbacks, with the National Commission of Audit helping to build the case for introducing measures to bring long-term spending growth under control.

Now the waiting is over, what does it all mean for your hip pocket?

Here's a brief round-up of what the 2014-15 Federal Budget could mean for your family finances.

Pension age rising to 70

The age at which you qualify for the age pension is set to increase further. From 1 July 2025, the qualifying age will continue to rise by six months every two years, from the age of 67 years (that will apply by that time), to gradually reach 70 years by 1 July 2035.

But the good news is there's no change to the super preservation age. Your super preservation age is the minimum age you can draw on your super, unless you satisfy another condition of release. The preservation age is currently 55, rising to 60 depending on when you were born.

Potential changes to the super preservation rules will be considered by future Government enquiries.if any of it is yours.

Pension asset test unchanged

The family home is still exempt from the pension asset test. So the current pension asset limits remain in place - $758,750 for singles and $1,126,500 for couples, excluding your home.

Changes to excess non-concessional super contribution rules

Currently, superannuation contributions that exceed the non-concessional cap are taxed at 46.5%.

After 1 July 2013, If you make excess non-concessional (i.e. after-tax) super contributions, you'll be able to withdraw them. You won't have to pay excess contributions tax and the associated earnings will instead be taxed at your marginal tax rate.

Deficit tax for high income earners

If you earn over $180,000 pa, you'll pay an extra 2% tax on the income in excess of $180,000 until 30 June 2017.

And the rest...

Other Budget proposals are wide-ranging, and could affect everyone from parents to disability pensioners, motorists, students and older workers. These include:

  • Co-payment of $7 for standard general practitioner consultations and out-of-hospital pathology and diagnostic imaging services
  • Fuel excise indexation reintroduced from 1 August 2014
  • Disability support pension test changes
  • Paid parental leave scheme revamped with payments of up to $50,000 over 26 weeks
  • Family tax benefit changes
  • Restart subsidy of up to $10,000 over two years for employers that hire older workers.

But don't forget, the proposals may change as the legislation passes through parliament.

Want to know more?

To find out more about how the Federal Budget could affect your household finances, go to amp.com.au/federalbudget, where we have more information about the changes, as well as an overview of how the Budget could affect the economy and investors from Dr Shane Oliver, AMP Head of Investment Strategy and Chief Economist.

What you need to know

Any advice in this document is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of this advice having regard to those matters and consider the Product Disclosure Statement before making a decision about the product. AMP Life is part of the AMP group and can be contacted on 131 267. If you decide to purchase or vary a financial product, AMP Life and/or other companies within the AMP group will receive fees and other benefits, which will be a dollar amount or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.