Budget Special Report - no surprises for property owners

14 May 2004

The Federal Budget announced this week held no changes or surprises for property owners and investors, although it does seem from the budget reforms that the Government is reminding us to plan for a self funded retirement instead of relying on Government pensions.

The main focus of the Budget which was announced on Tuesday night, was added incentives for families to have children, tax cuts for middle income earners, increased spending on defence, subsidies for nursing homes and a boosting of the dollar for dollar superannuation scheme for low income earners.

• Increased dollar for dollar superannuation contributions.
• The Government is encouraging more people to make voluntary superannuation contributions with the introduction of several new super incentives.
• As part of the plan, every dollar a low income earner contributes to their super, the Government will contribute $1.50, up to a maximum of $1,500. The contribution will apply to workers earning up to $28,000 and will be phased out completely at $58,000.
• In addition, the superannuation surcharge for those on higher incomes will be progressively reduced from 14.5% to 7.5% by 2006-07.
• More money for nursing homes.
• With a rapidly aging population the Government’s 2004 Budget focused on providing an increased number of aged care places. The Budget announcement included an extra $877.8 million to help aged care providers pay competitive wages to staff, $438.6 million in funding to help aged care organisations build new homes and refurbish old ones and an estimated 27,900 new aged care places to be allocated over the next three years – including more than 13,000 over this year.
• Personal income tax cuts.
• As part of other Budget reforms the Government announced it would cut income tax by $14.7 billion over the next four years.
• The plan is to raise personal income tax thresholds in two stages. From 1st July this year the 42% tax threshold will rise from $52,000 to $58,000, while the 47% threshold will rise from $62,500 to $70,000.
• In the second stage, the 42% threshold will be further increased to $63,000 and the 47% threshold will increase to $80,000 from 1st July 2005.
• As a result of these changes, the Government estimates more than 80% of Australian tax payers will have a top marginal tax rate of 30% or less.
• Money to improve building industry.
• As part of the Budget the Government announced it would be spending an additional $136.3 million over the next four years on establishing a building taskforce, cleaning up some of the unlawful practices in the industry and encouraging a more diverse building industry workforce.
• Under the allocation, $9 million will be given to extend the Building Industry Taskforce; more than $90 million will be spent establishing an Australian Building and Construction Commission; $21.7 million to put in place a Federal Safety Commissioner; $12.1 million to increase the number of older workers in the workforce and $9.5 million over four years to the Department of Employment and Workplace Relations to support continuing structural reform in the industry.
• Financial relief for Australian farmers.
• Farmers will benefit from the latest budget with $73 million in Exceptional Circumstance assistance being allocated to eligible areas in the form of income assistance and interest rate subsidies. An additional $1.1 billion in direct drought relief will also be offered between 2002 – 2006.