Here is a gist of the winners and losers in Budget 2009:

Winners

1. Low Income Earners: The tax cuts leave them better off.

2. Middle Income Earners: Tax cuts is a plus. But some will be hit by private health insurance changes and superannuation cap for salary sacrifice.

3. Pensioners: Increase in pension income

4. Carers: Carer income supplements announced

5. First Home Buyers: Extension of the first home buyers boost is a positive.

6. Companies: Small businesses gain from increase in deduction for capital assets. Spending for some large infrastructure projects were announced in budget 2009. Companies will benefit from this.

7. Parents: Paid parental leave a step in the right direction

Losers

1. Baby Boomers: Increase in pension age to 67. I personally think this was kind of inevitable - but having said that I will be quite sad if age for accessing superannuation also increased. Nothing announced on this as yet.

2. High Income Earners: Changes to private health insurance, medicare levy surcharge increase, superannuation changes - quite a few negative things for this category.

3. Middle Income Earners: Though they get some tax cuts, they lose out on superannuation changes and the private health insurance changes.

This was always going to be a tough budget - we are in tough times and so no major benefits can be announced. Increased infrastructure spending is a good thing - will boost economy.

What are your thoughts about the Budget 2009? Share your thoughts below

Back in 2000, the Federal Government announced a $7000 first home owners grant to help the first home buyers enter the property market. In 2008, the Federal Government announced a $7000 first home boost - So since 2008 September buyers of an established home/apartment receive $14,000 and buyers of a new home/apartment receive $21,000. This boost of $7000 was supposed to end on June 30 2009.

There was a huge increase in buyer activity over the past 3 to 6 months - buyers wanted to make their purchase before the boost gets scrapped. Now in budget 2009, the Government announced that the boost will be continued for another three months and after that it will be phased out and then completely abolished in December 2009.

So if your property settles before September 30th 2009, you will be eligible for the full boost - new or hugely renovated homes/apartment will get $21,000 ; old homes/apartment will get $14,000.

After September 30th 2009, the boost will be cut by 50% for 3 months. So if your property settles between September 30th 2009 and December 30th 2009 - new or hugely renovated homes/apartment will get $14,000 ; old homes/apartment will get $10,500.

After December 30th 2009 the boost will be scrapped. So after this date, all owners will receive only $7000 (first home owner grant only - no boost).

This extension will definitely have a positive impact on the property market. A lot of property experts believe that this boost has saved us of a serious downturn in the property market.

Are you happy with this extension? Share your thoughts below…

Other 2009 Budget Posts:


Changes For Carers’ Income


Pension Income and Pension Age Changes


Superannuation Changes


Paid Parental Leave


Private Health Insurance Changes


Tax Cuts


Budget 2009 Winners and Losers

Last year the Government promised a two part personal income tax cuts. The second part of this tax cuts was due to be announced in this budget. There was a lot of media speculation that the Government will scrap these cuts - but the Government kept its promise. The tax cuts were announced in budget 2009. The cuts across the board - Employees on $40,000-$60,000 a year will receive an annual tax cut of $300, while higher-income earners on $120,000 will receive an annual cut of $950.

In Budget 2009, the Government also announced some tax relief for small businesses whose turnover is up to $5 million dollars. The tax cut is to help them out during these tough times. Currently for capital assets over $1000 business owners get a 30% tax deduction. This has bee increased to 50%. Cars, computers or upgrades to equipment are all eligible capital assets. If the business buys a computer for $2000, currently there is a deduction of $600 but from July 1st the deduction is $1000.

If you are a small business owner and/or have some thoughts/comments on this increase in tax break, please share your comments below.

Other Budget 2009 Posts:


Changes For Carers’ Income


Pension Income and Pension Age Changes


Superannuation Changes


Paid Parental Leave


Private Health Insurance Changes


First Home Buyers Grant Boost


Budget 2009 Winners and Losers

To reduce burden on public health system and to encourage more people to take up private health insurance the Government currently provides us with a 30% rebate on the premium paid and fines the high income earners who don’t take up private health insurance with a medicare surcharge.

In 2009 Federal Budget, the Government has announced changes to the rebate and the surcharge. The Government has now introduced a tiered system. This new system will come into effect from July 1st 2010.

Tier One


Singles earning more than $75,001 and couples earning more than $150,001, the rebate has been reduced to 20% from 30%. The rebate is 20% for people under 65, 25% for people over 65 years and 30% for people over 70 years. The medicare surcharge, if you don’t have private health insurance, is one percent.

Tier Two


Singles earning more than $90,001 and couples earning more than $180,001, the rebate has been reduced to 10% from 30%. The rebate is 10% for people under 65, 15% for people over 65 years and 20% for people over 70 years. The medicare surcharge (if you don’t have private health insurance) has been increased to 1.5 percent. This increase is to prevent high income and middle income earners from fleeing private health insurance (since the rebate has been reduced).

Tier Three


Singles earning more than $120,001 and couples earning more than $240,001, the rebate has been completely removed - Zero rebate. The medicare surcharge (if you don’t have private health insurance) has been increased to 1.5 percent. This increase is to prevent high income and middle income earners from fleeing private health insurance (since the rebate has been reduced).

This change is going to hit both high income and middle income earners quite hard. The Government’s expects people will continue with their private health insurance, despite the reduced rebates, because if they don’t they will charged a heft surcharge.





If you have any thoughts or if you would like to share how this change is going to affect you, then please share your comments below.

Other Budget 2009 Posts:


Changes For Carers’ Income


Pension Income and Pension Age Changes


Superannuation Changes


Paid Parental Leave


First Home Buyers Grant Boost


Budget 2009 Winners and Losers


Tax Cuts

Budget 2009 has a bright spot for would-be parents - From 2011, the primary carer will receive paid parental leave. To be eligible for the parental leave, the primary carer has to be earning less than $150,000 - so if a mum is a primary carer then she has to be earning less than $150,000 - if a dad is a primary carer then he has to be earning less than $150,000. The paid parental leave is for 18 weeks at minimum wage - $540 per week. These parents will not not get the baby bonus and also during these 18 weeks they will not be eligible for any family tax benefits.

This is a step in the right direction. The first few months in a baby’s life are very important - both for the parent and the baby. This leave help in bonding, breast feeding, recovering and most of all - just enjoying being a mum.

The paid parental leave will be financed by the Federal Government and not the company. Some companies have some kind of paid maternity leave (very few - I think BHP has something for mums on maternity leave). These companies should not remove the current incentives they provide - and companies which were planning to introduce a paid maternity leave should still do.

Other Budget 2009 Posts:


Changes For Carers’ Income


Pension Income and Pension Age Changes


Superannuation Changes


First Home Buyers Grant Boost


Budget 2009 Winners and Losers


Tax Cuts

A couple of significant changes to superannuation were announced in the 2009 budget. The first one was the reduction in superannuation caps (for concessional superannuation contributions). The second was the reduction in co-contribution amounts. Here is my detailed review about these changes and how they will affect us:

Concessional Superannuation Caps


Most of us have heard of salary sacrificing - you basically invest some of your pre-tax income into your superannuation. This way you pay less tax on your salary (as your gross income is now reduced). You pay 15% contributions tax for the amount that you invest in superannuation (the amount you salary sacrificed). Anyone can salary sacrifice (provided your employer allows it) but this method is more beneficial to people on the higher marginal tax rates. Currently if you’re aged over 50 your concessional contributions cap is $100,000 up until 30 June 2012 (i.e $100,000 in 2010 and 2011 together). For people aged under 50 the cap is $50,000. A lot of people aged over 50 have been either busily topping up their super or were planning to top up their super over the next two years.

In 2009 Budget it was announced that the cap on concessional super contributions for people aged under 50 will be reduced to $25,000 from $50,000 and for people aged above 50 it will be reduced to $50,000 from 100,000 until 2011-12. The cap will become $50,000 for all ages from July 1st 2012.

This change puts a lot of people in their fifties in a tight situation - especially if they were planning to retire early. This will also hit the small business owners and women quite hard. These two groups of people cannot always invest extra into super and usually increase their savings as they approaching their retirement. The $100,000 was attractive - the $50,000 cap is not large enough and will reduce the saving capability.

There is also an important lesson for people under 50 - plan to save for retirement over your entire working life, not just as you approach your retirement. The laws might change anytime - So your best bet is to save over the years.

Co-Contribution Changes


Currently if you are an employee, if you make a contribution to your super from your after tax income then the Government will co-contribute into your super. If your total income is $30,342 or less, the maximum co-contribution is $1,500. So the co-contribution is $1.50 for every $1 you contribute. Co-contributions reduce as your income increases, stopping completely for incomes of $60,342 or more.

In Budget 2009, the Government has announced that this co-contribution will be reduced to 100 percent. This is a temporary change only. It increases to 125 per cent for the 2013 and 2014 years, and goes back to 150 per cent from 2015. The maximum contribution for the next two years would now be $1,000.

This change will affect the middle income earners. It will limit their ability to boost up their super savings.

These two changes has definitely changed the attraction in investing in superannuation.

Share your thoughts about the super changes announced in 2009 Federal Budget.

Other Budget 2009 Posts:


Changes For Carers’ Income


Pension Income and Pension Age Changes


Paid Parental Leave


First Home Buyers Grant Boost


Tax Cuts
Budget 2009 Winners and Losers

The carers are winners in the budget 2009. Those who receive a carer payment will receive the pension increases of $32.49 a week for singles.

Also ,a permanent carer supplement of $600 a year will be introduced for carer payment recipients and an extra $600 a year for carer allowance recipients for each person in their care.

The supplement will replace the Government’s one-off bonuses.

Other Budget 2009 Posts:


Pension Income and Pension Age Changes


Superannuation Changes


Paid Parental Leave


First Home Buyers Grant Boost


Tax Cuts
Budget 2009 Winners and Losers

On May 12th, Wayne Swan, our federal treasurer, delivered 2009 Federal Budget. In a series of posts I am going to write about how this budget will affect us all.

Aged Pensioners


Single aged pensioners will receive $32.49 more a week; couples will get an extra $10.14. 2009 Budget replaces the current pension incomes and assets means tests with a broader income test.

The changes will mean that the income threshold to receive a pension will decrease. Under the new rules, the aged pension will be paid to new pensioners with private income of up to $38,693 for singles, and $59,228 for couples combined - down from $47,444 for singles and $72,423 for couples combined under current income test rules.

Pension Age


The pension age has been increased by two years. The Government has announced a staggered increase to pension age from 2017 with an aim to reach 67 in 2023. Pension age is when you become eligible for government pension benefits (depending on your income and assets).

Currently the pension age is 65 years for men and 63 years and 6 months for women. Anyone whose current age is around 45 or less will be affected by this change. Increase in pension age means people now have to work longer. This change has been brought about to cope with the increasing aging population. This change is inevitable.




Access To Superannuation

Currently you can access your superannuation before you reach your retirement age / pension age. The age at which you can access your superannuation is called preservation age. The current preservation age is between 55 and 60 (depends on your date of birth). It makes sense to have a lower preservation age than the pension age / retirement age. You might retire before you reach your retirement - So why should you wait an extra few years to get access to your superannuation.

There are some reports in the media that based on recommendations by the Treasury, Government will announce some radical changes to preservation age - the preservation age will be increased and brought in line with the pension age. This change is not good news. Lot of people retire before their retirement age. They might want to travel or simply enjoy life.

By lifting the reservation age to 67, you are basically giving the retirees access to their superannuation at a very late stage in their life - they will be reaching 70 soon after they receive superannuation. Because of health conditions, it can be too late for some to travel. This change has not been announced yet but there are rumours in the media that it is just a matter of time before it is announced. Let us hope the rumours are wrong.

If you have an opinion about any of the matters mentioned in this post, please share your thoughts in the comments area.

Other Budget 2009 Posts:


Changes For Carers’ Income


Superannuation Changes


Paid Parental Leave


First Home Buyers Grant Boost


Tax Cuts
Budget 2009 Winners and Losers

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