Provided by Mercer: 16/5/08
Read on for a summary of how the Federal Budget 2008 will impact working families.
Changes to the Baby Bonus
The Baby Bonus will rise to $5000 from 1 July 2008. From 1 January 2009, the Bonus will be means-tested and limited to families with combined adjusted taxable income of $75,000 in the six months after the baby’s birth.. From 1 January 2009, the Baby Bonus will be paid in 13 fortnightly instalments rather than as a lump sum.
Changes to the Family Tax Benefit B from 1 July 2008 will also mean that this benefit is only available where the primary earner has an adjusted taxable income of $150,000 pa or less.
Read more about the Baby Bonus.
Means testing of government support
From 1 July 2009, the definition of income to determine eligibility for government support programs will include certain salary sacrificed contributions to super. 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), as well as family assistance and child support payments.
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.
Increases to the child care rebate
The child care rebate will increase from 30% to 50% on out of pocket expenses from 1 July 2008. The rebate will be capped at $7500 a year per child, which represents an increase of over $2500 a year for some families. The rebate will be paid quarterly from July 2008.
Read more about the child care rebate.
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.
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 the first Home Saver Accounts.
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.
