So….what a budget! After a lot of hype it’s finally been released and, as predicted, it didn’t pull many punches.
For what’s being marketed as “The end of the Age of Entitlement”, Australians are being warned of wide-ranging cuts, tax increases and savings measures to bring the budget back under control and end deficits “as far as the eye can see”.
Some of the tax measures include a reduction in the company tax rate by 1.5% to 28.5%. This is coupled with a 1.5% increase in tax rate for all companies with turnover above $5 million to pay for the paid parental scheme.
In effect, this means small companies with a turnover below $5 million will receive a 1.5% cut from 1 July 2015. The Temporary Budget Repair Levy (TBRL) will be introduced from 1 July 2014 to 30 June 2017, where taxpayers earning above $180,000 will be charged an additional 2% above of the top marginal tax rate. This rate represents an effective top rate of 49% (including the medicare levy), and note that it is only for amounts earned above this $180,000 where the levy applies.
The Fringe Benefits Tax (FBT) rate will increase to 49% from 1 April 2015 onwards. This is in line with the introduction of the Temporary Budget Repair Levy, meaning the FBT rate continues to be in line with the higher marginal tax rate plus medicare levy. This presents some opportunity for taxpayers on the top marginal tax rate around salary packaging arrangements.
There was no change to the GST, although much exposure in the media suggests this may shortly be requested by the State and Territory governments. We’ll keep across this issue and advise as we learn more.