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While many workplaces around Australia might be getting excited about the new MasterChef season beginning tonight, at the Rising Tide office the impending release of the federal budget is what everyone is talking about. For our little office of self-professed finance geeks, the only thing more exciting than the release of the government’s financial plan would be Hawthorn making the grand final! But that’s another story…
So what can we expect from the budget this year and how will it affect you? Here’s what we know so far:
Health Minister Sussan Ley has been tasked with cutting $3 billion over the next five years from the money the government pays drug companies for medicines and what it pays chemists to dispense them.
There will also be a review of treatments and procedures subsidised under Medicare, but the Government insists this won’t mean another push for a GP co-payment.
How this will affect you: If these proposed cuts go through the senate the cost of some drugs (particularly brand name drugs) may increase.
The government has already released the first tranche of their much talked about ‘families package’. So far, the government are proposing a $150 million pilot program beginning in January 2016. The program will trial a new childcare scheme in which working parents will be eligible for a government subsidy for unqualified, in-home childcare, or ‘nannies.’ The aim of the scheme is to make it more feasible for low and middle-income parents to work more, particularly shift workers who often require childcare outside of hours that childcare centres operate. The program will only apply to families with a combined annual income of up to $250,000 who cannot access “mainstream” childcare services.
The “working more” theme is likely to be a common theme in any further changes to childcare the government proposes as part of the budget.
How this will affect you: You’ll have to wait until 2018 for the results to come in from the nanny subsidy trial but if it proves successful, parents may be eligible for government subsidised childcare in the form of an in-home nanny.
The government has been trying to make changes to the aged pension since they got elected but their proposal last year to cut the pension indexation rate was blocked by the senate. Inevitably this means the government will be looking at other options this time around.
The government is expected to lower the assets test for wealthier retirees and increase the taper rate. This means that some part-pensioners will be at risk of losing some of their payment depending on the types of assets they have.
This tactic will also save further funds in healthcare as it will reduce the number of people eligible for Seniors Healthcare Card concessions.
How this will affect you: If you’re receiving the aged pension the amount you are eligible for may reduce depending on your assets.
Banks Deposits Tax
This is a concept that labor put forward in 2013. The idea is that people will be taxed around 0.05 per cent on bank deposits in an attempt to raise around $500 million. The government intends to build a fund that could be used in the event of a banking collapse.
How this will affect you: The banks have warned that if this is put in to affect it will mean increased costs for customers.
This proposed new tax will target large multi-nationals who save billions every year by paying most of their tax in countries with lower tax rates than Australia. A similar tax of 25 per cent has been introduced in the UK (referred to as a “Google tax”).]
In early April, a Senate inquiry heard that 10 companies transferred a combined $31.4 billion in the 2011-2012 financial year from Australia to Singapore, where the corporate tax rate is 17 per cent.
How this will affect you: It won’t (unless you own a large multi-national company).
Small business tax cut
There will be at least a 1.5% tax cut for small businesses from 1st July this year.
How this will affect you: If you own a small business, you’ll pay less tax!