Brace for hip pocket pain
TOMORROW will herald the start of a very different financial year from the ones we have become accustomed.
For the first time in nine years we won't wake up with more money in our pay packets as the government has decided to pare back spending rather than offer tax cuts.
In fact, anyone earning more than $50,000 will pay more tax in the form of the new flood levy.
For example if you earn $80,000, you will pay a levy of 0.5% on $30,000, a total of $150, or $2.88 a week.
And that's not the worst of the news for a financial year that promises plenty of vinegar, but not much sugar.
The price of electricity is set to rise again, and at an average of $316, it will hurt many family budgets.
Still, there are a few sweeteners to welcome in the new financial year. Family Tax Benefit A will be extended to $6161 for 19-year-olds, rather than cutting out when a child turns 15.
And cash-strapped eligible families who get Family Tax Benefit A will be able to request an advance on their annual entitlement of up to 7.5%, capped at $1000 at any time throughout the year.
The low income tax-free threshold for those earning under $30,000 will also rise.
Financial planner and Northern Star Better Business columnist Jason McFadden said this meant low income earners would be taxed slightly less throughout the year, putting more in their pay-packet.
“The tax offset reduces the amount of tax people pay by $1500,” he explained.
“You receive that full amount if your income is below $30,000 but previously you had to wait until the end of the financial year. Under the change, what the government is doing is effectively adjusting the pay rate so you get that as you go every fortnight.”
As part of this change parents will no longer be able to “split” their income with their children from interest on savings accounts, share dividends or family trusts, WHK Accountants said.
Eligible superannuation fund members could now have excess concessional (pre-tax) contributions taken out of their super fund and assessed as income at their current marginal tax rate, rather than incurring excess contributions tax that currently stands at 31.5%.