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FEDERAL BUDGET - What it means to you

May 11, 2010

Wayne Swan delivered a fairly tame, yet solid, Federal Budget for the nation this week. Whilst the $40.8 billion deficit looks scary it is actually $16.3 billion less than what was expected. The Treasurer is also predicting a return to surplus three years earlier than expected. Good news.

Only a handful of goodies were expected after the handouts we got in last year's stimulus packages. But what would an election year be without a few incentives? Here is what you can expect.

Low Income Earners

In 2010/11, the Low Income Tax Offset will increase from $1,350 to $1,500. This is great news for low income earners who will be able to effectively earn up to $16,000 tax free. The Senior Australian Tax Offset will also increase to $30,685 for singles and $26,680 each for couples.

Tax cuts

Most taxpayers can expect a $300 tax saving from 1 July as the 30% marginal tax rate threshold increases from $35,000 to $37,000. The 38% marginal tax rate will decrease to 37% resulting in a potential tax saving of up to $1,000 for those earning more than $80,000.

Medicare levy threshold

Singles earning less than $18,488 and couples with a combined income under $31,196 will be exempt from paying the Medicare Levy in the 2009/10 year. However the threshold that taxpayers can claim 20% of net medical expenses has risen from $1,500 to $2,000.

First Home Savers

First Home Saver Accounts holders will no longer have to wait four years before they are able to buy a home due to a relaxation of the rules.

Super guarantee increasing

As announced in the Henry Tax Review, the super guarantee levy will be gradually increased by 3% to 12% in 2019.

$500 more for low earners

The Government will top up the super funds of wage earners by $500 if they earn less than $37,000.

Concessions for over 50s

Workers over 50 who have less than $500,000 in super will be able to contribute up to $50,000 a year from 2012.

Lower company tax

The company tax rate will reduce by 2% to 28% by 2014 with small businesses getting access to the cut a year earlier. Small business also wins with an immediate write-off for assets up to $5,000.

On a positive note ... the 50% tax discount on up to $1,000 of interest income from 1 July 2011. This will definitely make saving alot more attractive and provides an even playing field to those already enjoying tax advantages for share and property investments. This will place downward pressure on banks’ funding costs resulting in more competitive loan rates for home owners.

On a negative note ... the $500 standard deduction for work related expenses from 2012/13. An unofficial "$300 without receipts" system has been operating for umpteen years and it has been long overdue a CPI upgrade. According to ATO statistics, the average tax deduction claimed by individuals in 2007/08 was $3,311.

Tags: BudgetEmployeesPropertySmall BusinessSuper

Author: Mr Taxman

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  • "Unfortunately Natalie you are doubling up the extra tax taken out each fortnight with the year end assessment notice. Only the amount shown in the assessment is actually offset against your HELP..."

    By: Mr Taxman at Apr 24, 2017 11:45AM

    Post: Two important dates for those with HECS/HELP debts

  • "If you are under the repayment threshold each year then no repayment. Note that in last year's Federal Budget that the governmet intends on asking for repayment of HECS/HELP debts for non-residents..."

    By: Mr Taxman at Apr 24, 2017 11:43AM

    Post: Two important dates for those with HECS/HELP debts

  • "I have a HECS debt from 1998 that I have never repaid as I moved to UK in 2000 and unexpectedly stayed! Will this debt ever need to be repaid if I continue living in UK? If I return to Oz to..."

    By: Steve at Apr 23, 2017 8:26AM

    Post: Two important dates for those with HECS/HELP debts

  • "Hi Mr Taxman, I have been looking into my HECS debt because I feel that I should have paid it off by now. In 2011 the debt was at $21 399. I started working full time in 2013 and have been paying..."

    By: Natalie at Apr 20, 2017 9:06AM

    Post: Two important dates for those with HECS/HELP debts

  • "I suggest that you find a way to get the figures as any share of negative gearing losses you could claim in future tax returns once you start earning an income again. "

    By: Mr Taxman at Apr 17, 2017 3:21AM

    Post: Marriage