Last night the Federal Budget was handed down which confirmed a number of recently announced proposals as well as containing a few new measures.

The government reconfirmed the following superannuation proposals:

• Taxing earnings in pension phase that exceed $100,000 per annum.
• Increasing the contributions cap to $35,000 from 1st July 2013 for those aged 60 and over, and from 1 July 2014 for those aged 50 and over.
• Increasing the ability to refund excess concessional contributions and allowing excess concessional contributions to be taxed at you marginal tax rate plus an interest charge.
• Account based pension commencing after 1 January 2015 to be deemed for Centrelink purposes.
• Additional 15% tax on concessional contributions for those who have combined income and concessional contributions greater than $300,000.

Other announcements made include:

• The Medicare levy will increase by 0.5% to 2% per annum from 1 July 2014.
• The changes to marginal tax rates, income thresholds and low tax offset that were to take effect from 1 July 2015 will no longer proceed.
• The Baby Bonus will be abolished from 1 March 2014. This will be replaced for families who are eligible for Family Tax Benefit Part A by an extra $2,000 payment following the birth of their first child and $1,000 for subsequent children.
• The Net Medical Expenses tax offset will be phased out.
• Self-education expense deductions will be limited to $2,000 per annum.
• The indexation on the annual cap for the Child Care Rebate will be deferred for a further three years.
• Students will no longer receive a discount if they pay university fees upfront or repay their HELP debt early.
• A pilot program will come into effect on 1 July 2014 for older Australians who wish to downsize their homes which will give an exemption for up to $200,000 from the Age Pension means tests.

If you would like further information or would like to discuss any of the items covered please feel free to contact our office.