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2014-15 Federal Budget Summary

Posted By Administration, Sunday, 18 May 2014
Updated: Friday, 16 May 2014
Scott Douglas from Identity McIntryre Financial Group outlines how the Australian budget may impact you.

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?

The impact for non-resident Australians including expats is not significant and will have little impact if you have no assets or income linked to Australia. Most of the changes are  more relevant to financial  strategies you may deploy if you plan to retire in Australia longer term. There are certainly some positive aspects to the budget in terms of superannuation and contribution levels, most of which were previously announced.

Accordingly, below we have outlined at a high level  the areas of superannuation, investment and personal taxation that are impacted :-
  • Income Tax - For those who are on employment “secondments” and their package has a hypothetical tax arrangements there is an impact. Where you are earning more than $180,000 per annum a Temporary Budget Repair Levy of 2% will be payable on taxable incomes over $180,000 pa for the next three financial years. NB: FBT will also increase to 49% for those that salary package items. This would also apply to people who don’t meet the non-resident tax status and continue to be taxed in Australia on their offshore income.
  • Superannuation - Similarly, if your employer is continuing to contribute to superannuation in Australia, the superannuation guarantee amount will increase from 9.25%pa to 9.50%pa from 1 July 2014 (although the timeframe for increasing the Superannuation Guarantee contribution rate to 12% will be deferred).
  • Tax deductible contributions - For those interested in maximising their pre-tax contributions to superannuation, those under the age of 59 will have the ability to increase their level of concessional super, or pre-tax, contributions from 1 July 2014.  As previously announced, the current limit of $25,000 will increase to $30,000 per financial year for those 49 and younger.  The limit will be $35,000 pa for those over the age of 49 as at 30 June 2014.   This applies to non-resident who have tax positive positions on rental properties in Australia.
  • Post tax super contributions - The amount you can contribute into super from your own after tax savings (known as 'non-concessional contributions') will increase from $150,000 per annum (or $450,000 over a 3 year period) to $180,000 per annum (or $540,000 over a 3 year period) from 1 July 2014. This means there is additional capacity to increase your superannuation savings.  We recommend you seek advice. This would apply to people nearing retirement and wanting to build a tax free asset.
  • Investment portfolios - There has been no changes to the treatment of share and portfolio investments in Australia. They remain capital gains tax free and the income on franked dividends is tax free after franking.
  • Residential Property – both rental income and taxable  gains on Australian residential property are tax at the full “non-resident tax rates” starting at 32.5% on the first dollar of income. Taxable gains on property will not be receiving the 50% discount as with shares. This was announced in May 2012.
  •  Company Tax Rate – this rate will be reduced to 28.5%pa effective from 1 July 2014. This may apply if you still run a small business in Australia through a company.

The changes over the recent few budgets have emphasised the need to ensure you have a quality strategic plan in place. This should start when you arrive in Singapore and plan for your return to Australia. If you would like assistance with this we would be pleased to help.

Here’s a round-up of what the 2014-15 Federal Budget could mean for your family finances. But don’t forget, the proposals may change as the legislation passes through parliament.

1. Superannuation

1.1 Superannuation Guarantee (SG) rate – Change to increase schedule
Proposed effective date 1 July 2014

The Government will change the schedule for increasing the SG rate. SG contributions are the
compulsory super contributions made by employers into the super accounts of eligible employees. The
current SG rate is 9.25%.

The SG rate will increase from 9.25% to 9.5% from 1 July 2014 as currently legislated. The rate will
remain at 9.5% until 30 June 2018 and then increase by 0.5% each year until it reaches 12% in 2022-
23 as per the following table:

 Year  SG Rate (%)
 2013-14  9.25
 2014-15  9.5
 2015-16 9.5
 2016-17  9.5
 2017-18 9.5
 2018-19  10
 2019-20  10.5
 2020-21 11
 2021-22  11.5
 2022-23 12

1.2 Superannuation preservation age
Unless you meet an earlier condition of release, your preservation age is the minimum age you can draw on your super. The preservation age is currently 55, rising to 60 depending on when you were born. While no change to the preservation age for super benefits was announced in the Budget, the Government has indicated that this will be considered by future Government enquiries.

1.3 Excess non-concessional contributions (NCCs)
Proposed effective date 1 July 2013

NCCs are generally the after-tax contributions you make to your super. There is a limit (or cap) on the
amount of NCCs you can make to your super each year.

Currently, superannuation contributions that exceed the NCC cap are taxed at 46.5%.

The Government proposes to change this treatment for any excess NCCs made from 1 July 2013. You will be allowed to withdraw those excess contributions and associated earnings.

If you choose this option, no excess contributions tax will be payable and the associated earnings will
be taxed at your marginal tax rate.

Final details of the proposal, including the calculation of associated earnings, will be determined
following consultation with the superannuation industry.

1.4 Concessional contributions limits – increase for those under age 59
Proposed effective date 1 July 2014

Concessional contributions are those contributions made before tax on your behalf (ie, Employer super guarantee contributions, salary sacrifice contributions and deductible contributions for those eligible unsupported or self employed persons). The Budget did not make any changes to previously announced proposals to increase the concessional contribution limit to $30,000 per financial year from 1 July 2014 ($35,000 pa for those over 49 as at 30 June 2014).

This means those under the age of 59 will have the ability to increase their level of concessional super
contributions from 1 July 2014 from the current limit of $25,000 per financial year.

We encourage all to reassess the level of contributions being made into your superannuation.

2. Taxation

2.1 Personal marginal tax rates in 2014-15
Proposed effective date 1 July 2014
Marginal Tax Rate (%)
 0 – 18,200 0
 18,201 – 37,00019
 37,001 – 80,000 32.5
 80,001 – 180,000 37
 >180,000  47

2.2 Temporary budget repair levy (‘deficit levy’)
Proposed effective date 1 July 2014

Previously announced in the media as the ‘deficit levy’, an additional 2% levy is proposed to apply to high income earners. The levy will be applied to taxable income in excess of $180,000 pa from 1 July 2014 for a period of three years expiring at 30 June 2017. This will effectively raise the top marginal tax rate from 45% to 47% (plus Medicare Levy).
What does it mean for you?
  • With the legislated rise in the Medicare levy (see below) and this proposed deficit levy, you might consider deferring tax deductible expenses to next tax year or bringing forward income to the current tax year where possible.
  • With liability to both the Medicare levy and this proposed new deficit levy based on your taxable income, any tax deductions (eg investment loan interest) will reduce your potential liability to these levies. So, for example, while contribution caps apply, salary sacrifice to super (or making personal tax deductible contributions where eligible) will reduce your liability to these levies.
As everyone’s circumstances are different, you should speak to your financial adviser to help you decide whether these strategies are suitable for you.

2.3 Temporary increase in fringe benefits tax (FBT) rate
Proposed effective date 1 April 2015

The FBT rate has already risen to 47% as a consequence of the increase in the Medicare levy and an additional rise to a total of 49% is now proposed. This proposal aims to broadly prevent anyone liable for the proposed deficit levy from swapping taxable income (taxed at 49%) for fringe benefits taxed at the lower rate of 47%. The increase in the FBT rate to 49% will occur from 1 April 2015 to 31 March 2017 (aligning with the FBT years).

2.4 Medicare levy rises
Effective date 1 July 2014

Medicare levy will rise to 2% on 1 July 2014 (currently 1.5%). This was announced and legislated by the previous government, to assist with funding the Disability Care Australia Fund (previously known as the National Disability Insurance Scheme).

2.5 Abolition of certain tax offsets
Proposed effective date 1 July 2014

The Government proposes to abolish the following tax offsets from 1 July 2014:
  • Dependent Spouse Tax Offset. Currently this tax offset applies to dependent spouses born before 1 July 1952.
  • Mature Age Worker Tax Offset. Currently this tax offset is limited to taxpayers born before 1 July 1957. This tax offset is $500 and is assessed on ‘net income from working’.
2.6 First Home Saver Accounts (FHSAs) scheme is ending
Proposed effective date 1 July 2014

The Government proposes to abolish the FHSA scheme.
  • New accounts opened from Budget night will not be eligible for concessions.
  • For existing accounts, the Government co-contribution will cease from 1 July 2014.
  • Tax concessions and the income and asset test exemptions for government benefits associated with these accounts will cease from 1 July 2015.
  • From 1 July 2015, account holders will be able to withdraw their account balances without restriction.

3. Social Security

3.1 Age Pension – Increasing eligibility age
Proposed effective date 1 July 2025

From 1 July 2025, the Age Pension qualifying age will continue to rise by six months every two years,
from the qualifying age of 67 years that will apply by that time, to gradually reach a qualifying age of 70
years by 1 July 2035.

People born before 1 July 1958 will not be affected by this measure.

People born between  Eligible for Age Pension at age
 1 July 1952 and 31 December 1953 65.5
 1 January 1954 and 30 June 1955  66
 1 July 1955 and 31 December 1956 66.5
 1 January 1957 and 30 June 1958 67
 1 July 1958 and 31 December 1959  67.5
 1 January 1960 and 30 June 1961 68
 1 July 1961 and 31 December 1962 68.5
 1 January 1963 and 30 June 1964 69
 1 July 1964 and 31 December 1965  69.5
 1 January 1966 and later 70
3.2 Resetting the deeming rate thresholds on financial investments
Proposed effective date 20 September 2017

Currently, the deeming thresholds are $46,600 for singles, $77,400 for pensioner couples and $38,700 for members of allowee couples.

From 20 September 2017, the deeming thresholds for means tested payments will be reset to $30,000
for singles and $50,000 for couples (for both pensioners and allowees).

What does it mean for you?
The lower deeming thresholds will result in a higher level of deemed income (assuming current
deeming rates) being counted under the social security income test. This may have negative impacts
for strategies affected by deemed income, such as the assessment of account based pensions started
from 1 January 2015 and eligibility for the Commonwealth Seniors Health Care Card (CSHC) from that

3.3 Other changes that could affect older Australians and families
Proposed effective date – various

  • The family home will continue to be exempt as an asset regardless of its value.
  • Concessions for pensioners and Seniors Card holders may reduce due to Government withdrawing state and territory funding in provision of state and territory concessions for eligible pensioners and seniors.
  • The minimum age to qualify for Newstart Allowance and Sickness Allowance will increase to 25 years for new applicants from 1 January 2015.
  • Currently, many social security related payments are indexed in line with the higher of the increases in the Consumer Price Index (CPI), Male Total Average Weekly Earnings or the Pensioner and Beneficiary Living Cost Index.
From 1 September 2017, certain social security payments will be indexed by the CPI. These
payments include:
  • Bereavement Allowance
  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Certain Department of Veterans’ Affairs pensions.
What does it mean for you?
The proposed new indexation arrangements will lead to a comparative reduction in the growth of the above entitlements. So to maintain your standard of living, you may need to rely more on your own capital and closely monitor your cash flow needs.

4. Older Australians – Self-funded

4.1 Commonwealth Seniors Health Card (CSHC) eligibility test changes
Proposed effective date 1 January 2015

Untaxed superannuation income will be included in the assessment of income to determine eligibility for
the CSHC from 1 January 2015.

The assessment of superannuation income will be the same for CSHC holders as for Age Pension recipients and will align with the 2013-14 Budget measure – that is, it will deem the balances of account-based superannuation of pensioners from 1 January 2015.

All superannuation account-based income streams held by CSHC holders as of 1 January 2015 will be grandfathered and any income/lump sums from these income streams will not be assessed.

What does it mean for you?
Currently, tax free income payments or lump sums received by those over age 60 are exempt from assessment for the CSHC. This proposal appears to change the eligibility test for CSHC from a ‘taxable income’ test to a Centrelink income test. But if you start receiving a super account-based income stream before 1 January 2015 you won’t come under the new deeming rules.

4.2 Wage subsidy for employers hiring job seekers age 50 and over
Proposed effective date 1 July 2014

Under a new program named Restart, a payment of up to $10,000 over two years will be available to employers who hire an eligible mature age job seeker aged 50 years or over on a full-time basis.

Employers that hire mature-aged job seekers on a part‑time basis (12-29 hours per week) will be eligible for a pro‑rated subsidy based on hours worked.

To be eligible for a payment, employers must employ job-seekers over age 50 that were previously unemployed for a minimum of six months, plus they must employ that person for at least six months.

To be eligible for Restart, employers will need to demonstrate that the job they are offering is sustainable and ongoing, and that they are not displacing existing workers with subsidised job seekers.

Payments will be paid in the following instalments:
 Period worked – Months Payment to employer
 6  3,000
 12  3,000
 18  2,000
 24  2,000
4.3 Removal of Seniors Supplement
Proposed effective date 20 September 2014
The Government will remove the Seniors Supplement for holders of the CSHC. This measure will also apply to veterans who hold a CSHC or Gold Card. The Seniors Supplement is currently paid at the rate of $876.20 pa for a single person and $660.40 pa for each member of a couple. Eligible seniors who do not receive a pension will continue to be eligible for the CSHC.

5. Families

5.1 Paid Parental Leave
Proposed effective date 1 July 2015

The Government has restated its plan to revamp the paid parental leave scheme.

The scheme will provide paid parental leave for 26 weeks based on pre-birth earnings up to an annual cap of $100,000 including superannuation payments, a payment of up to $50,000 including super over the 26 week period.

5.2 Changes to Family Tax Benefit (FTB) Part A and B
  • Indexation of FTB payment rates will be frozen for two years until 1 July 2016. This will affect the maximum and base rates of FTB Part A and FTB Part B.
  • The end of year supplement for both FTB Part A and Part B will decrease. The Part A supplement will fall from $726.35 to $600.00 per child pa whilst the Part B supplement will fall from $354.05 to $300.00 per family pa. Indexation of these supplements will also cease from 1 July 2015
  • Currently, families do not receive a reduction below the base rate of FTB Part A until annual family income reaches $94,316 plus $3,796 per child. From 1 July 2015 the $3,796 per child add-on to the allowed income will cease.
  • Currently, FTB Part A families receive a large family supplement which is payable for their third and each subsequent child. This is currently $313.90 per child pa. From 1 July 2015, this payment will apply for the fourth and subsequent children in a family.
  • The current primary income earner limit of $150,000 pa will reduce to $100,000 pa. FTB Part B will also cease to be paid to families from 1 July 2015 once their youngest child reaches six years of age. Transitional arrangements will apply which allow families receiving FTB Part B on 1 July 2015 for a child six years of age or over to remain eligible for a further two years.
  • Single parent families on the maximum rate of FTB Part A will receive $750 pa for each child aged between six and 12. The payment will start when the family becomes ineligible for FTB Part B due to their youngest child turning six.

What does it mean for you?
  1. The changes to the FTB Part A income thresholds will mean that you may need to look at the income estimates you provide to Human Services to receive this payment. If this estimate is miscalculated and you receive fortnightly payments throughout the year, you may incur a debt at the end of the financial year. A potentially safer option if you’re close to the upper threshold is to wait until the end of the financial year and receive an annual payment when you lodge your tax return.
  2. For parents with young families, the FTB Part B changes could mean you need to plan for the extra cashflow required if one of you wants to stay at home or only work part time after your youngest child turns six.

6. Other

6.1 Medical appointment co-payment
Proposed effective date 1 July 2015

A patient contribution of $7 is proposed for each visit to a doctor (GP), out-of-hospital pathology and diagnostic imagery services (even from those who currently bulk-bill). This co-payment would also be able to be applied to those attending a hospital emergency department for services usually supplied by a GP. The co-payment is proposed to apply from 1 July 2015. Patients who hold concession cards and children under age 16 will generally only pay the contribution for the first ten visits in a year.

6.2 Fuel excise
Proposed effective date 1 August 2014

The Government is reintroducing indexation of fuel excise from 1 August 2014 with the goal of securing more stable funding for additional road infrastructure projects.

Twice-yearly indexation by the CPI of excise and excise-equivalent customs duty will be reintroduced for all fuels except aviation fuels.

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).
Any advice in this communication has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs.

Apogee Financial Planning Limited ABN 28 056 426 932, registered office 105 - 153 Miller Street North Sydney NSW 2060, is an Australian Financial Services Licensee and member of the National Australia Bank group of companies. From time to time Apogee Financial Planning, members of the National Australia Bank group of companies, associated employees or agents may have an interest in or receive pecuniary and non pecuniary benefits from the financial products and services mentioned herein.

Further Reading


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Tags:  Australian Budget 2014  Scott Douglas 

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The commercial ecosystems of Singapore today

Posted By Administration, Wednesday, 12 March 2014

The 3rd Singapore. Australia's Senior Trade Commissioner, Mr Christopher Rees on understanding Singapore's economic ecosystem.

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Tags:  3rd Singapore  Asia  Business  Chris Rees  Roadshow  Singapore 

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Australian Roadshow (March 2014) Harnessing Asia's economic boom for Australia's benefit

Posted By Administration, Wednesday, 12 March 2014

This video contains market insights on Singapore from the key speakers of the Australian Roadshow 2014 'Harnessing Asia's economic boom for Australia's benefit', being held this week in Australia (March 2014).

Mr Philip Green OAM, Australia's High Commissioner in Singapore (DFAT)
Mr Guy Scott, President, AustCham Singapore

Mr Christopher Rees, Senior Trade Commissioner, Singapore (Austrade)

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Tags:  Asialink  Asian Business Engagement  Austrade  Business  Chris Rees  Guy Scott  Philip Green  Singapore 

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Why Australian Business chooses Singapore...

Posted By Administration, Tuesday, 4 March 2014

The Singapore business case - Learn why Australians are discovering that Singapore's good for business.

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Tags:  Adam Lyle  Dale Anderson  Derek MacKenzie  KL Gates  Nick Hanna  Singapore 

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Bringing the beach lifestyle to Singapore

Posted By Administration, Monday, 3 March 2014
Updated: Thursday, 20 February 2014

Seafolly is one of the world’s most recognised swimwear and beach lifestyle brands, spanning the broad international market in more than 30 countries. This fully-owned Australian family-run business has been at the epicentre of Australian beach lifestyle since its inception in 1975. AustCham member and Business Development Manager for Seafolly, Gina Astee, has been responsible for bringing this iconic Aussie brand to Singapore.

"Seafolly epitomises Australia’s beach lifestyle, so being Australian is who we are – we are proud of our beach culture and the role that Seafolly has played in introducing that culture to the world and now Asia,” says Gina.

Seafolly Singapore launched at Takashimaya Department Store in November 2010. Following the success of its space in Takashimaya, Seafolly opened its first flagship store outside of Australia in June 2011 in Wisma Atria.

"The success of Seafolly is without question its ability to suit everybody, every age and equip every woman or girl to hit the water with its mix and match range,” says Gina.

"We cater to size DD to petite and, rather than sell swimwear in sets, we sell in pieces so customers can not only find the perfect fit, but also create their own style by putting together different pieces from the range."

Like many expats, Gina was surprised by the lack of swimwear choices available and the high cost of what was on offer when she moved to Singapore.

"The distributors were charging almost double of what I would pay for the same swimsuit at home. When we opened at Takashimaya we were offering fashion forward swimwear and beach apparel in sizes to fit the local customer, but also the bigger expats at price parity. It was a win-win,” explains Gina.

Working in Singapore has definitely bought its challenges. Gina explains: "The paperwork is overwhelming – the signatures, the chops are all very frustrating to someone embarking in retail in Singapore for the first time. Finding good staff has been key and it is a rocky road to find local staff that understand your requirements. It was difficult setting up, but it was a huge learning curve and I’m now getting ready to do it all again”.

"It has been very exciting watching Seafolly become so accepted by the locals, but also the visiting Asian tourists – the Chinese are really starting to understand Seafolly and that is very exciting,” says Gina, who adds that another highlight is seeing Australians pleased and relieved to discover Seafolly is in Singapore.

In terms of marketing its product, Gina explains that Seafolly is an international brand and it follows an international strategy with a few tweaks for local festivals such as Chinese New Year.

"We have created a red-inspired window specifically for Singapore. We don’t have winter here so we don’t follow the Australian time line completely by ranging the winter wear and so on. We also buy stock slightly differently for each market.

"Although we stock the full range in Singapore, we do tweak the sizes and styles – Singaporeans tend to be a tad more conservative than the average Aussie beach goer.”

Gina describes Seafolly’s launch in Singapore as "an amazing adventure”.

"I feel very excited and honoured to be part of the birth of such a great brand in Singapore and I am super excited to see how the brand continues to grow,” says Gina.

Seafolly’s next opening in Singapore will be at Robinsons at Raffles City so, as Gina says, "the adventure continues”.

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Tags:  Bringing the beach lifestyle to Singapore  Gina Astee  Seafolly  The Singapore Story 

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