Overview of the Federal Budget 2010

Kade Anthony 12-May-2010

Federal Treasurer Wayne Swan has handed down his third Budget promising to return the Budget to surplus in three years. The fiscally conservative Budget reconfirmed the recent announcements by Treasurer Swan in response to the Henry Taxation Review.

In addition there were a number of changes to taxation, superannuation and social security benefits. These changes include lower tax on bank savings with a 50 per cent discount on up to $1000 of interest income, standard deductions for tax returns and childcare rebate capped to 2008-09 level of $7500 per child.

Superannuation

• Government confirms that the matching rate for the co-contribution scheme will stay the same.
• The super guarantee rate will increase from 9% to 12%, commencing 1 July 2013.
• The super guarantee maximum eligibility age to 75 from 70 providing an incentive for older workers to stay in the workforce.
• A 15% low income earners Government contribution capped at $500 will be introduced, effectively refunding contributions tax on up to $3,330 of concessional contributions. o
• Reform of First Home Saver Accounts (FHSA) - savings in an FHSA can be paid into an approved mortgage after the end of a minimum qualifying period, rather than requiring it to be paid to a superannuation account.

Taxation

• There will be lower tax on savings, with the first $1000 in interest discounted at a rate of 50%.
• The standard company tax rate will reduce to 29% from 1 July 2013, then 28% from 1 July 2014.
• The small business company tax rate will reduce to 28% from 1 July 2012.
• The government has introduced a standard tax deduction to simplify your tax return.
• Tax rate reductions announced ion 2008 budget will go ahead.

Social security

• The Government had already extended the Family Tax Benefit –A to cover children aged 16-20 who do not have a Year 12 or equivalent qualification, and who participate in full-time education or training, or part-time education or training in combination with other approved activities. From 1 July 2010 part-time education or training will now not be sufficient.
• The Child Care Rebate will be capped at $7,500 per child (2008/09 level) from the current annual cap of $7,778 per child.

Henry Review response

• The Government has confirmed their commitment to some previously announced superannuation and taxation measures.