Provided by Mercer: 16/5/08
Read on for a summary of how the Federal Budget 2008 will impact single salary earners and couples without children.
Personal income tax cuts
From 1 July 2008, the average salary earner on $48,000 p.a. will receive $20 per week extra in their pay packet. People earning $80,000 p.a. will save $21.15 per week and those on $180,000 and over will save $50 a week, due to new income tax thresholds. Further tax cuts will be made in 2009 and 2010. There is an opportunity for these savings to be invested in super, so you can benefit from a favourable tax structure and the compounding effect of returns over the long term.
View the 2009/10 tax cuts
First Home Saver Account scheme
People between ages 18 and 65 who have not previously bought or built a first home to live in can open a First Home Saver Account from 1 October 2008. The accounts will be offered through certain financial providers. Personal contributions of up to $5,000 made to an account each year will be met by a Government contribution of 17%.
Read more about First Home Saver Accounts
Means testing of government support
From 1 July 2009, the definition of income to determine eligibility for several government support programs will include certain salary sacrificed contributions to super. In particular, this will affect some people’s eligibility for the Government Co-contribution (whereby the Government tops up your super when you make a post tax contribution).
Are you eligible for a Government Co-contribution this financial year?
Speak to a Mercer financial adviser about a contributions strategy that takes advantage of both salary sacrifice and the Government Co-contribution before 1 July 2009.
Change to Fringe Benefits Tax (FBT) concessions
Effective from the time of the Budget’s announcement, some work-related items that are purchased from pre-tax salary (“salary sacrifice”) will no longer receive an exemption from Fringe Benefits Tax. These include laptops, personal digital assistants and mobile phones that are not primarily used for work.
Speak to a Mercer financial adviser about how the changes to Fringe Benefits Tax could affect your broader financial strategy.
Employee share schemes
Currently, people who buy shares under an employee share scheme can choose to be taxed on their employee discount in the year of purchase, or defer the tax for up to 10 years. However, in some cases they may be able to choose the “up-front” option retrospectively. From 1 July 2008, people must include an amount in their income tax return in the year of purchase, otherwise the tax-deferred option will apply.
Speak to a Mercer financial adviser about the most appropriate tax option for your circumstances.
Changes to the Medicare Levy Surcharge
Single employees earning less than $100,000 and couples and families with combined income of less than $150,000 will now be able to opt out of private hospital cover without incurring the Medicare Levy Surcharge.
Read more about the Medicare Levy Surcharge.
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
