Australia: Details of Budget for 2014-15
On May 13, 2014, Australia's Treasurer presented the Budget for 2014-15 to Parliament. Details of the Budget, unless otherwise indicated, will apply from July 1, 2014. Highlights summarized below.
- The Treasurer confirmed a 1.5% reduction in the company tax rate for small businesses from July 1, 2015 from 30% to 28.5%. However, for a company with taxable income in excess of $5 million, any expected benefits from the rate cut will be largely offset by the imposition of the Paid Parental Leave (PPL) Levy at the rate of a 1.5 per cent, to be imposed on the taxable income that exceeds $5 million.
- To prevent the use of non-cash benefits to avoid the Levy, the Fringe Benefits Tax will also be increased by 2% to 49% effective FBT year commencing from April 1, 2015.
- The top tax rate that applies to income in excess of AUD 180,000 will be temporarily increased by 2% by applying a Temporary Budget Repair Levy (TBRL) on top of income tax for 3 years from July 1, 2014 until June 30, 2017.
- The Superannuation Guarantee (SG) rate will be raised to 9.5 per cent from 9.25 per cent for four years effective July 1, 2014.
- The Medicare levy will increase from 1.5 per cent to 2 per cent from July 1, 2014.
- A number of tax credits will be abolished (Dependent Spouse Tax Offset, Mature Age Worker Tax Offset and Seafarers Tax Offset).
- The Treasurer announced a reduction to a number of social security benefits and a number of other important non-tax changes.
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