What does the Federal Budget mean for you?
When Joe Hockey stood in front of parliament and spoke about “fixing the Budget together”, he
confirmed that the 2014 Federal Budget was going to be a tough one for many Australians.
Not surprisingly, most of the announcements related to spending cuts, as the Government
seeks to return the Budget to surplus by 2018.
In particular, “the end of the age of entitlement” will see a reduction in welfare payments and
concessions to many middle-income households. Also, high income earners will be asked to pay
more tax over the next three years.
In terms of new spending, the two main commitments were to infrastructure and medical
research, which will be funded by respective levies on petrol and doctor visits.
A major boost was also provided to businesses, with a reduction in the company tax rate from
1 July 2015.
What are the key changes that may affect you?
1. If you are still working …
Income tax increase for high income earners
The top marginal tax rate for individual taxpayers will increase by 2% to 47% (or 49%
including Medicare levy) for 3 years commencing 1 July 2014. The increased top marginal tax
rate will apply to taxable income earned in excess of $180,000 per annum. In other words, if
you earn $200,000 per year, only $20,000 is taxed at the higher rate.
Changes to the Family Tax Benefit (FTB)
The following changes to the FTB will see family payments reduce in some cases:
The current indexation increases of the maximum and base rates of FTB Part A, and the rate of
FTB Part B, will be paused until 1 July 2016.
From 1 July 2015, FTB Part B changes will include a reduction in the primary earner income
limit from $150,000 to $100,000. It will also be limited to those families whose youngest child
is younger than six years of age.
For FTB Part A, the large family supplement (currently $313.90 per child) will be limited to
families with four or more children. This will be paid in respect of the fourth and each
subsequent child in a family.
Increase of Superannuation Guarantee
From 1 July 2014, the SG rate will increase to 9.5%, where it will stay until 30 June 2018. The
rate will then increase by 0.5% each year until it reaches 12% in 2022/23.
For employees, these changes may allow you to effectively manage your contribution caps for
the 2014/15 financial year. For employers, it gives you added certainty on the level of SG
contributions you need to make from 1 July 2014.
Reduction in the company tax rate
The Government has re-instated its commitment to cutting the company tax rate by 1.5% from
1 July 2015, from 30% to 28.5%.
For large companies, the reduction will offset the cost of the Government’s Paid Parental Leave
levy. For smaller companies it will help improve cash flow and profitability.
RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429
Level 23, 242 Pitt Street Sydney NSW 2000
Document Title
Mature Age Worker Tax Offset
From 1 July 2014, the Mature Age Worker Tax Offset and Dependant Spouse Tax Offset will be
abolished.
2. If you are retired or approaching retirement …
Excess non-concessional contributions tax
Superannuation members will now be able to withdraw any non-concessional superannuation
contributions (and related earnings) made after 1 July 2013 that breach the non-concessional
contributions cap. Where contributions are exceeded, only the associated earnings will be taxed
at the top marginal tax rate.
This change will assist anyone who breaches the non-concessional contribution caps from 1 July
2013. Leaving excess contributions within superannuation will continue to incur tax at the top
marginal rate.
Increase of Age Pension Age
The Age Pension qualifying age will continue to rise by six months every two years from the
qualifying age of 67 (from 1 July 2023), gradually reaching a qualifying age of 70 years by 1
July 2035.
Individuals born before July 1958, or those in receipt of a DVA Service Pension, will not be
impacted by these changes.
People born between
Eligible for Age Pension at age
1 July 1952 and 31 December 1953
65½
1 January 1954 and 30 June 1955
66
1 July 1955 and 31 December 1956
66½
1 January 1957 and 30 June 1958
67
1 July 1958 and 31 December 1959
67½
1 January 1960 and 30 June 1961
68
1 July 1961 and 31 December 1962
68½
1 January 1963 and 30 June 1964
69
1 July 1964 and 31 December 1965
69½
1 January 1966 and later
70
Means test exemption for downsizing family home
The ‘Housing Help for Seniors’ pilot’ announced in the 2013-2014 Budget will no longer take
place.
Deeming Thresholds
From 1 September 2017 the deeming thresholds will be reset to $30,000 for singles and
$50,000 for couples.
Commonwealth Seniors Health Card (CSHC) changes

The qualifying limits for the CSHC will be indexed from September 2014. The rate of
indexation will be based upon the Consumer Price Index.

CSHC holders will not receive the Seniors Supplement from 20 September 2014.
Currently the seniors supplement is:
Document Title
Single/Illness separated couple - $876.20
Eligible couple (combined) - $1,320.80

CSHC holders will continue to receive the Clean Energy Supplement and access the
Pharmaceutical Benefits Scheme (and the lower threshold for the extended Medicare
Threshold).
1 January 2015 changes
Tax free superannuation income will be included in the definition of income 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 measure to deem the balances of account based
pensioners from 1 January 2015.
Existing superannuation account based income streams held by CSHC holders before the
implementation date will be grandfathered under the existing rules.
Other proposed changes that may affect you?

From 1 July 2015, a patient contribution of $7 will be introduced for standard GP consultations
and out-of-hospital pathology and diagnostic imaging services.
What happens next?
Most of these changes are only at the proposal stage, and they will need to be legislated before
they come into effect.
However, it’s always a good idea to be aware of what changes may be coming and what they
might mean for you.
If you have any questions or concerns about how these or any other proposals could impact
you and your family, always speak with your financial adviser.
This information is issued by RI Advice Group Pty Ltd, ABN 23 001 774 125, which holds Australian Financial Services License Number
238429 and is a summary of RI Advice Group Pty Ltd understanding of the proposed Federal Budget 2014/15 changes announced on 13
May 2014. The changes are subject to the passing of legislation and, accordingly, may not become law or may change. Please no te that the
information is based on RI Advice Group Pty Ltd interpretation of the proposed changes as at the date of issue of this document. Accordin gly,
you must not do or refrain from doing anything in reliance on this information without obtaining suitable professional advice .
In addition, the information is of a general nature and may not be relevant to your/your client’s individual circumstances. B efore making any
investment decision you must consider the relevant PDS. PDSs are available on request by calling RI Advice Grou p Pty Ltd
This information does not consider your personal circumstances and is general advice only. You should not act on any recommen dation
without obtaining professional financial advice specific to your circumstances. If you wish to opt out of future c ommunications please contact
us.
RI Advice Group Pty Ltd ABN 23 001 774 125, AFSL 238429. Level 23, 242 Pitt Street Sydney NSW 2000