The 2012 Budget explained! How will it effect you?

THERE were few surprises in Labor Treasurer Wayne Swan's Budget 2012, but the headline items have been collected below 

 

Basics

* $1.5 billion surplus in 2012/13

* GDP growth of 3.25 per cent in 2012/13

* Net debt to peak at 9.6 per cent of GDP

* Unemployment forecast for 5.5 per cents

* Tax-free threshold tripled from $6000 to $18,200 from July 1

* $3.6 billion from mining tax redirected to families and small businesses

Families

* Up to $600 a year extra for those receiving Family Tax Benefit A

* Supplement of up to $210 a year for single students, jobseekers, parents with young children and those on income support. Couples to receive an additional $350.

* Up to $820 a year for high school students and $410 for primary school students direct to families

Business

* Business able to offset tax losses of up to $1 million against tax paid in previous years

* Small business allowed to immediately write-off every eligible asset they buy for less than $6500

Health and disabilities

* $1 billion over four years for the National Disability Insurance Scheme NDIS to cover 10,000 people from 2013/14 and 20,000 from 2014/15

* $515 million for immediate public dental care

* $346 million over three years for a "blitz" on public dental waiting lists

* 40,000 more aged home care packages over five years

* $660 million over five years for aged-care providers to invest in better services

* $1.2 billion over five years for better trained, better paid aged-care workers

* Hospital upgrades and doctor training costing $475 million

* $50 million over four years for bowel cancer screening

* $234 million extra to computerise medical records

Training and workforce

* $101 million to support the government's aim of increasing jobs training

* $61 million to get older workers retrained

* $225 million to get parents with young children back into the workforce

* $1.5 billion over five years for employment services in rural and regional areas

Education

* $54 million to encourage maths and science studies at school and university

* $38.8 billion over five years for higher education

Transport

* $3.6 billion for more Pacific Highway duplication

Revenue initiatives

* Plans to cut the company tax rate from 2013 ditched - extra $4.6 billion raised over five years

* Plans to simplify tax returns to allow a standard deduction ditched - extra $1.6 billion raised over four years

* Higher concessional caps for over-50s with superannuation balances under $500,000 pushed back from July 1 this year to July 1 2014 - extra $1.4 billion raised over four years

* An extra $106 million over four years to help the Australian Taxation Office collect more debts - extra $1.1 billion over four years to 2015/16

* Fringe benefit tax changes to living away from home allowances - extra $1 billion over the four years to 2015/16

* Reduced higher tax concession for superannuation contributions of very high incomes earners - extra $1 billion over the four years to 2015/16

* Additional voluntary GST compliance measures brought in two years early - extra $1.1 billion over the four years to 2015/16

* 50 per cent tax discount for interest income ditched - extra $795 million over the four years to 2015/16

So how will this affect you?

 

Here's a look at some of the key announcements that will affect you and your hip pocket:

If you are an average tax payer…
The tax-free threshold has tripled from $6000 to $18,200, reducing the tax burden on low-income earners. So, for a person earning $50,000 a year that will mean an extra $2,053 in the pocket for 2012-13.

Low-income earners (up to $37,000) will also get a boost of $500 to their Superannuation savings.

If you have children…

Throw out the shoebox of receipts, as the Education Tax Refund has been replaced by the Schoolkids Bonus - a twice-yearly payment into your bank account. Parents will receive payments of $820 a year for each teenager they have at high school, and $410 for primary students.

From 1 July 2013 the Family Tax Benefit Part A will increase for all eligible families. Families with one child will get an extra $300 a year, and an extra $600 for families with two or more children.

The Government is investing an additional $225.1 million over four years to help 130,000 Australians with childcare costs back into the workforce. Through the Jobs, Education and Training Child Care Fee Assistance it will help eligible parents on income support by paying the difference of the cost of childcare and the amount of childcare benefits they receive.

If you are an unemployed parent…
Single unemployed parents will have their parenting support payments removed when their youngest child turns eight (compared with 16 now).At present, single mothers receive $648.50 a fortnight until their youngest child turns 16. The new plan, which comes into effect in July 2013, will end the payments when the child turns eight and shift them on to the Newstart Allowance.
For partnered parents the $442 fortnightly income support payment will now end when the youngest child turns six.

If you are a non-resident worker…
It's all bad news. Firstly, most of you will lose the Living Away from Home Allowance (see below), and from 1 July all non-resident workers will have to pay a blanket 32.5 per cent tax rate – regardless of whether they're low income earners.

If you receive income support…
You will receive an additional yearly allowance of $210 if single and $350 per couple. This will kick in from March 2013 and applies to recipients of Youth Allowance, Newstart Allowance and Parenting Payment.

If you earn more than $300,000…
There'll be no more squirrelling money into Superannuation at the low tax rate of 15 per cent. Now very high-income earners will have to pay 30 per cent tax on Super contributions. This will impact 128,000 Australians.

Also, they're scrapping the Low Income Tax offset for non-work income of minors. So this means high-income earners can no longer dodge the ATO by income splitting with their children to avoid tax. Tut tut.

If you're about to receive a Golden Handshake…
No more large tax concessions for generous executive salary packages as the Government targets the Employment Termination Payment offset. The tax concession will only remain for genuine redundancies or if you lose your job due to illness or disability.

If you're a mature age worker…
Firstly, the Government is phasing out the mature age worker tax offset (MAWTO), which was designed to encourage participation. Not applicable to those who are 55 or over on 1 July 2012.
On top of that, if you have a spouse dependent, the dependency offsets have been reformed.
And, if you're planning to retire in a few years – think again. The Age Pension age for men and women will be increased by six months every two years, commencing from 1 July 2017 and reaching 67 on 1 July 2023.

If you're a motorist…
The unintended incentive to drive your vehicle further than you need to in order to obtain a larger tax concession is gone. The reformed Fringe Benefits Tax treatment of cars will mean a flat rate by 1 April 2014 – no matter how far you drive.

If you're a smoker…
The days of bringing home 200 cheap cigarettes from overseas are over. You're now only allowed to bring home 50 cigarettes duty-free.

If you're a small business owner…
Unfortunately, the one per cent company tax cut that was rumoured for small businesses didn't materialise. Mr Swan blamed the Opposition for standing in his way.

Instead he pledged $3.7 billion in other small business tax breaks. From 1 July all small businesses can immediately write off each and every business asset they buy for less than $6500 and write off the first $5000 for cars or utes. Also, a single depreciation pool for assets costing $6500 or more - which should be some help.

The "loss carry-backs" system will only benefit a small percentage of Australia's 2.7 million small businesses. The new system will allow small business to offset losses made this year against profits made in previous years.

At present
, small businesses can only carry their losses forward to be offset against future income and future profits. The new scheme will be capped at $1 million of losses with a maximum benefit to any firm of $300,000. Also, the Entrepreneurs Tax Offset has been scrapped.

If you have elderly parents…
The aged care system will provide 40,000 more home care packages over the next 5 years as part of a $3.7 billion package of reforms of Australia's aged care system.

If you're a student…
$54 million has been pledged to encourage more students to study Maths and Science. The 2012 academic year has seen undergraduate places fully uncapped at all public universities for the first time driving an estimated $5.2 billion increase above previous funding levels to universities between 2010 and 2015.

If you have a disability…
The budget committed $1 billion to the 400,000 Australians living with a significant and permanent disability through the National Disability Insurance Scheme. 10,000 disabled Australians will benefit from 1 July 2013.

If you're on the public dental waiting list…
You're in luck. One of the big-spending measures in this Budget is a $515 million injection to reduce the public dental waiting list, which stands at 400,000.

If you're unemployed…
No more long overseas trips if you want to keep collecting the dole. People on welfare will have their payments stopped if they go overseas for more than 6 weeks. Before that, the cut-off was 13 weeks.

If Australia is invaded before 2030…
We're in all sorts. The Budget announced the biggest cuts to the military since the end of the Vietnam War with a massive $5.5 billion cut in Defence spending over four years. But Mr Swan insists the nation will still have the capacity to defend itself. The cuts will also potentially mean widespread redundancies in Defence's civilian workforce.

If you receive LAFHA…
You're not laughing anymore and will have to say cheerio to the lucrative Living-Away-From-Home-Allowance.The new reforms mean it can only be used for the expenses of people who are legitimately maintaining a second home in addition to their actual home. So, Ireland or England doesn't count as a second home for most people who are here on a working holiday and 457 visas. It was good while it lasted - sorry guys.

If you're a big business…
The big selling point of the Budget is “sharing the wealth of the mining boom”. So to that end the Government will from 1 July 2012 introduce the Minerals Resource Rent Tax, extend the Petroleum Resource Rent Tax to onshore oil and gas projects and the North West Shelf and last but not least….

…if you're impacted by the Carbon Tax (PS. that's everyone)

It will cost each household an average $9.90 a week. The Government will reimburse you $10.10. Which means everybody will be 20 cents better off a week…

If you love natural therapies…
No more freebie crystal therapy or flower essences I'm afraid.The government will crack down on taxpayers' funds being used to subsidise ''natural therapy'' services which do not present clear evidence they are clinically effective.

Services that are will be ineligible for the health insurance rebate include naturopathy, aromatherapy, ear candling, crystal therapy, flower essences, homeopathy, iridology, kinesiology, reiki and rolfing.

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WINNERS AND LOSERS

WINNERS:

Disabled people

Some small business
Well loss-making ones anyway can now offset their losses against taxes they have paid in previous years.The policy would lower the tax burden on companies that make a loss due to major investment spending, such as manufacturers that experience one-off losses due to making expensive upgrades to equipment.

Low income earners
It is the largest increase in the tax free threshold ever and the first increase in more than ten years.

The Low Income Superannuation Contribution will kick in on july 1 providing $500 for those with taxable income up to $37,000.

LOSERS:

Non-resident workers
You've been done like a dinner. You lose your living-away-from-home-allowance (which in fairness is a good move as it was originally designed to encourage people to rural areas). But to put a blanket tax rate of 32.5 per cent on all non-resident earners, even if they're only earning $50k is unfair.

Old People
The Age Pension age for men and women will be increased by six months every two years, commencing from 1 July 2017 an reaching 67 on 1 July 2023.

Australia now ranks as the world's 10th-biggest donor in dollar terms. To stay on course, the allocation would have to have been about $5.6 billion.

Natural therapists
The government has cracked down on taxpayers' funds being used to subsidise ''natural therapy'' services which do not present clear evidence they are clinically effective.Services that are now ineligible for the health insurance rebate include naturopathy, aromatherapy, ear candling, crystal therapy, flower essences, homeopathy, iridology, kinesiology, reiki and rolfing.

Families with more than 2 children

The rest of the small businesses

Smokers
Buying cheap smokes abroad will be a thing of the past.

Big business
Sharing the wealth of the mining boom means the Government will from 1 July 2012 introduce the Minerals Resource Rent Tax, extend the Petroleum Resource Rent Tax to onshore oil and gas projects and the North West Shelf.

 info sourced from http://www.couriermail.com.au/news/federal-budget-2012-what-it-means-for-you/story-e6freon6-1226350266754

RBA rates decision: official comments

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to lower the cash rate by 50 basis points to 3.75 per cent, effective 2 May 2012. This decision is based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated.

Growth in the world economy slowed in the second half of 2011, and is likely to continue at a below-trend pace this year. A deep downturn is not occurring at this stage, however, and in fact some forecasters have recently revised upwards their global growth outlook. Growth in China has moderated, as was intended, and is likely to remain at a more measured and sustainable pace in the future. 

Conditions in other parts of Asia softened in 2011, partly due to natural disasters, but have recently shown some tentative signs of improving. Among the major countries, conditions in Europe remain very difficult, while the United States continues to grow at a moderate pace. Commodity prices have been little changed, at levels below recent peaks but which are nonetheless still quite high. Australia's terms of trade similarly peaked about six months ago, though they too remain high.

Financial market sentiment has generally improved this year, and capital markets are supplying funding to corporations and well-rated banks. At the margin, wholesale funding costs have declined over recent months, though they remain higher, relative to benchmark rates, than in mid 2011. Market sentiment remains skittish, however, and the tasks of putting European banks and sovereigns onto a sound footing for the longer term, and of improving Europe's growth prospects, remain large. Hence Europe will remain a potential source of adverse shocks for some time yet.

In Australia, output growth was somewhat below trend over the past year, notwithstanding that growth in domestic demand ran at its fastest pace for four years. Output growth was affected in part by temporary factors, but also by the persistently high exchange rate. Considerable structural change is also occurring in the economy. Labour market conditions softened during 2011, though the rate of unemployment has so far remained little changed at a low level.

Recent data for inflation show that after a pick up in the first half of last year, underlying inflation has declined again, and was a little over 2 per cent over the latest four quarters. CPI inflation has also declined, from about 3½ per cent to a little over 1½ per cent at the latest reading, as the weather-driven rises in food prices in the first half of last year have, as expected, now been fully reversed.

Over the coming one to two years, and abstracting from the effects of the carbon price, inflation will probably be lower than earlier expected, but still in the 2–3 per cent range.

As a result of changes to monetary policy late last year, interest rates for borrowers have been close to their medium-term averages over recent months, albeit tending to increase a little as lenders passed on the higher costs of funding their books. Credit growth remains modest overall. Housing prices have shown some signs of stabilising recently, after having declined for most of 2011, but generally the housing market remains subdued. The exchange rate remains high even though the terms of trade have declined somewhat.

Since it last changed the cash rate in December, the Board has maintained the view that the setting of policy was appropriate for the time being, but that the inflation outlook would provide scope for easier monetary policy, if needed, to support demand. The accretion of evidence over recent months suggests that it is now appropriate for a further step in that direction.

In considering the appropriate size of adjustment to the cash rate at today's meeting, the Board judged it desirable that financial conditions now be easier than those which had prevailed in December. A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates.

info sourced from http://www.smh.com.au/business/rba-rates-decision-official-comments-20120501-1xwhj.html

Industry pundit calls for 0.5pc rate cut

The Reserve Bank of Australia could cut the official cash rate by 50 basis points when the Board meets tomorrow, Residex chief executive John Edwards has claimed.

While national house prices grew slightly over the last quarter, Mr Edwards said without stimulus in the form of an interest rate cut, values would steadily decrease again.

“I would not be surprised to see the RBA cut rates by 0.5 per cent at its May Board meeting. In any event, a 0.25 per cent reduction looks all but certain,” Mr Edwards said.

“There has been comment that the unemployment rate (5.2 per cent) could affect the likelihood of a rate reduction given that it has not been increasing. However, there are some worrying trends in the employment data and I believe the RBA will not be blind to these issues.

“What appears to be happening is that the unemployment rate may only be remaining steady as a consequence of people taking up part-time employment and this won’t be delivering quality levels of income.”

Mr Edwards said the Reserve Bank would more than likely overlook the unemployment situation and instead focus on the latest CPI results.

“In the latest release, CPI came in at 0.1 per cent for the March quarter, unchanged from the December 2011 quarter. It rose 1.6 per cent through the year-ending March 2012, compared with a rise of 3.1 per cent to the year-ending December 2011,” he said.

“Clearly, CPI is now at the lower end of the RBA’s target range and, given its objective of achieving a 2 to 3 per cent CPI outcome, a rate cut is looking certain.”

 info sourced from http://www.rebonline.com.au/breaking-news/5000-industry-pundit-calls-for-05pc-rate-cut

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Reserve Bank April Market Wrap

The Reserve Bank (RBA) released the minutes of their April board meeting this week. At this board meeting the RBA somewhat surprisingly decided to keep official interest rates on hold at 4.25%. The minutes have left the door open for a May rate cut, with most economists expecting a 25 basis point cut if consumer price growth remains low (March quarter CPI data is released on April 24, one week before the next RBA board meeting). With specific relation to the housing market, the minutes stated ’Members spent some time exploring reasons for the weakness in many of the indicators for housing turnover and building activity across Australia. They noted the apparent sensitivity of developers to the outlook for dwelling prices. New dwelling construction had fallen in the December quarter and there was little sign of a pick-up in building or loan approvals, though house prices had shown some signs of stabilising recently. While auction clearance rates in Sydney and Melbourne had picked up a bit of late, they remained below their average levels.’ The minutes of the meeting also stated: ‘The Board would have the opportunity at its next meeting to review the inflation outlook based on comprehensive new data on prices, as well as information on demand and output. Members judged it prudent to evaluate those data before considering a further policy adjustment.’ Based on these comments, if inflation is low over the quarter many except that the board will cut official interest rates next month.
The Australian Bureau of Statistics (ABS) released data on the value of construction work done over the December 2011 quarter and it showed the weakness in residential construction activity is persisting. Over the quarter, the total value of residential construction fell by -1.8% and compared to the December 2010 quarter it was -6.3% lower. The total value of residential construction completed has now fallen over three successive quarters, highlighting the persistent weakness in residential construction activity. 

info sourced from pages.e.rpdata.com/industry-wrap-200412/

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Cracking the Code to Goal Connection

Most people struggle to stay focused on their goals.  Setting the goal is easy; remaining focused is the hard part.  Why is it so?  If you wrote the goal down it must have been important so why are you not pursuing it at full pace?  This is the question I ask people who are procrastinating about taking action that they know makes sense – it is the right thing to do and they know it will work for them.

The key is that we have not truly connected to goal use the 3 key elements …

Emotional Connection … This is where your passion comes from. How do you want to feel? What is your heart telling you to do? Why do you want to achieve that goal? If you don’t have an Emotional Connection with your goal you will feel uninspired.

Mental Connection …  This is where your plan comes from. What do you need to achieve? What is your head telling you to do? What action steps do you need to take? When you don’t have a Mental Connection with your goal you will feel lost, that you do not have a plan to move forward.

Physical Connection … This is where progress comes from. How are you going to make it happen? What do you have to create using your body / the physical activity? What do you need to do now? When you don’t have a Physical Connection with your goal you will feel frustrated that you are not taking action.

 info sourced from http://www.keithabraham.com/blog/2012/03/cracking-code-goal-connection/?utm_source=The+Tribe&utm_campaign=3b50fca6e3-Blog+tracking&utm_medium=email