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Australia: Australia Issues Budget for 2014-15 – Tax Rise for FBT and Individuals but Reduction for Small Companies
The Budget for 2014-15 was presented to Parliament by the Treasurer on May 13, 2014. Details of the Budget are summarized below. The changes will apply from July 1, 2014, unless otherwise stated -
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 A$5 million (~USD 4.7 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%, to be imposed on the taxable income that exceeds A$5 million.
The top tax rate that applies to income in excess of AUD 180,000 (~USD 169,200) 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.
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 April 1, 2015. This will give a window for 1 year to plan tax for employees.
The Superannuation Guarantee (SG) rate will be raised to 9.5% from 9.25% for four years effective July 1, 2014.
The Medicare levy will increase from 1.5% to 2% 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 pension age will be gradually increased to 70.
The Treasurer announced a reduction to a number of social security benefits and a number of other important non-tax changes.