No cuts from RBA but Budget Makes a Dent (Budget Summary)

The Reserve Bank of Australia has left interest rates on hold this month, meaning the official cash rate will remain at a historic low of 2.00%.

Last month’s downward move by 0.25 points caused a stir with many of the big banks dragging their feet to pass on the cut and few actually passing on the full 0.25%.

There has been some movement since though and discounting fixed rate terms is starting to hot up with rates from three, five and even seven years sitting between four and five per cent. Any way you look at it these are the lowest rates on record which makes borrowing to purchase or invest in a home, business or business equipment a fairly attractive proposition right now.

And, whilst the razor didn’t come out on rates this month it certainly did in last month’s budget release. There’s no denying the government is pushing an increased investment in small business and there are some great tax cuts and incentives on the table.

How the budget will affect you is totally dependent on your life stage and personal circumstances but following is a quick summary of major proposed policy changes:

 

BUDGET SUMMARY – What’s In It For You

Remember if you’d like more specific information on how budget changes affect your household budget and wealth planning, members of our in-house Financial Planning team can answer your questions, just give us a call.

Just starting out

  • Incentives to undertake work experience and join the workforce
  • Increased Medicare levy low income thresholds

Families

  • Reforms to child care payments
  • Nanny pilot programme for rural and remote families
  • Removal of ‘double dipping’ on paid parental leave
  • Tax cuts for small businesses
  • Changes to taxation of Employee Share Schemes to make it easier for small start-ups to offer share or option plans
  • Tightening of rules on work-related car expense deductions
  • Changes to overseas portability rules for family tax benefit

Retired (or on your way)

  • Rebalanced pension asset test thresholds
  • Relaxed criteria for access to super – terminal medical condition
  • Changes to overseas portability rules for age pension

Small Business (aggregated annual turnover of less than $2 million)

  • Corporate tax rate reduced from 30% to 28.5% [proposed from 1 July 2015]
  • Unincorporated small businesses will be eligible for a 5% business income tax offset, capped at $1,000 a year [proposed from 1 July 2015]
  • Fringe benefits tax changes for work-related electronic devices [proposed from 1 April 2016]
  • Capital gains tax roll-over relief for business entity restructures [proposed from 1 July 2016]
  • Immediate tax deductions for assets under $20,000 [from 7.30pm on 12 May 2015 until 30 June 2017]

Additionally, new business start-ups will be allowed to immediately deduct a range of professional expenses associated with starting a new business, such as professional, legal and accounting advice.

For more information on how you can make low interest rates (and possibly budget changes) work for you, give us a call on 07 3899 2866 and one of our Finance Consultants or Advisers can point you in the right direction.

 

Reference: AMP Budget Summary – www.amp.com.au/news/2015/may/federal-budget-2015-16