Federal budget update

Treasurer Joe Hockey’s first federal budget was released last night. This update gives an outline of some of the proposed main changes to super, tax and social security.

Don’t forget that legislation will need to be passed before the budget proposals can take effect, and that the measures may be subject to change during implementation.

Super and pensions

The budget brought no changes to the tax payable on super benefits, or to the amounts you can contribute to super each year, or to the age at which you can get access to your super.

Superannuation Guarantee (SG) rate

The SG rate will increase as legislated from 9.25% to 9.5% from 1 July 2014, and will then gradually reach 12% by 1 July 2022. This is to occur despite the defeat of the repeal of the Mineral Resources Rent tax in the Senate (the SG increase is a related measure).


SG rate

1 July 2013 – 30 June 2014


1 July 2014 – 30 June 2018


1 July 2018 – 30 June 2019


1 July 2019 – 30 June 2020


1 July 2020 – 30 June 2021


1 July 2021 – 30 June 2022


1 July 2022 and later


What might this mean for you?

This confirms that the increase in the SG rate to 12% will be deferred. (The ‘SG’ rate is the percentage of an employee’s salary that their employer must contribute to their super each year.)

More flexibility for breaches of the after-tax super contribution limit

There is currently a limit of $150,000 per year (or $450,000 over three years for clients under age 65) for making after-tax (sometimes called ‘non-concessional’) contributions to super, with financial penalties for breaching the limit. (The limit increases to $180,000 per year (or $540,000 over three years for clients under age 65) from 1 July 2014.)

Individuals will now be able to withdraw contributions they’ve made from 1 July 2013 in excess of the limit, and any associated earnings, with these earnings to be taxed at the individual's marginal tax rate. Where this option is chosen, no excess contributions tax will be payable. Individuals who leave their excess contributions in the fund will still be taxed on these contributions at the top marginal rate.

The details of the policy will be finalised after consultation with stakeholders.

What might this mean for you?

If you breach the after-tax contribution limit, you’ll effectively be able to reverse the effects of making an excess contribution.

Confirmation of the government’s pre-election commitments about the age pension

The government confirmed its pre-election commitment that it would make no changes to the age pension in this term of government. It did however announce a range of other changes to the age pension that it intends to apply beyond this current term.

Increase in the age pension qualifying age

Continuing from the previously legislated increase in the age pension age to 67 by 1 July 2023, the government now intends to increase the eligibility age to 70 by 1 July 2035.

What might this mean for you?

Your date of birth

Age at which you’ll be eligible for the age pension

1 July 1952 - 31 December 1953


1 January 1954 - 30 June 1955


1 July 1955 - 31 December 1956


1 January 1957 - 30 June 1958


1 July 1958 - 31 December 1959


1 January 1960 - 30 June 1961


1 July 1961 - 31 December 1962


1 January 1963 - 30 June 1964


1 July 1964 - 31 December 1965


1 January 1966 and later


Freeze on increases to the income and asset test thresholds

The Government has proposed a three year pause in indexation of the income and asset test thresholds.

  • Thresholds for non-pension payments will be frozen for three years from 1 July 2014.
  • Thresholds for pensions and pension related payments will be frozen for three years from 1 July 2017.
What might this mean for you?

The benefit payable to a recipient affected by the income or assets means test would be less than had been expected.

Reduction in rate of indexation of pensions

From September 2017 Pension indexation (including Age Pension, Disability Support Pension, Veterans’ Affairs Pensions and others) will be linked to the Consumer Price Index (CPI) rather than the current indexation by the higher of the increase in the CPI, Male Total Average Weekly Earnings or the Pensioner and Beneficiary Living Cost Index.

What might this mean for you?

Pensions will increase at a lower rate than previously.

Social security and family

Increase in Medicare levy low-income threshold for families

The Medicare levy low‑income threshold for families will be increased from the 2013‑14 financial year, with the threshold for couples with no children increasing to $34,367. A further $3,156 will be added to the threshold for each dependent child or student.

Family situation

No levy payable 2013-14 if taxable income is below:



Additional amount for each dependent child or student


What might this mean for you?

For couples, if your combined income is less than $34,367 you won’t pay the Medicare levy. If you have children, your threshold increases by $3,156 for each child. For example, if you have two children, your threshold is $40,679 ($34,367 + $3,156 + $3,156).

Changes to Family Tax Benefit

The Government announced a range of measures that will impact families in receipt of Family Tax Benefit (FTB), including:

  • The primary earner income limit for Family Tax Benefit Part B (FTB-B) will be reduced from $150,000 per year to $100,000 per year from 1 July 2015;
  • The income threshold for the dependent (invalid and carer) tax offset (linked to the FTB-B) will be reduced to $100,000;
  • FTB-B will be limited to families whose youngest child is under age six, from 1 July 2015;
  • Families with a youngest child age six and over on 30 June 2015 will remain eligible for FTB-B for two years;
  • The current FTB payment rates won’t rise for the two years from 1 July 2014:
  • FTB-A large family supplement (currently $313.90 per child per year) will be limited to families with four or more children, from 1 July 2015. The supplement will be paid in respect of the fourth and each subsequent child;
  • A new allowance of $750 per child from 1 July 2015 will be provided for single parents on the maximum rate of FTB-A whose youngest child is age 6-12 when they become ineligible for FTB-B.
  • The FTB-A add-on per child to the higher income free threshold for each additional child will be removed from 1 July 2015;
  • FTB end-of-year supplements will be revised to their original values and indexation will cease from 1 July 2015. The revised supplements will provide $600 pa per FTB-A child and $300 per family pa for each FTB-B family;
  • Eligibility thresholds will remain unchanged for 3 years for FTB, Child Care Benefit, Child Care Rebate and Parenting payment.
What might this mean for you?

Broadly speaking, fewer families will now qualify for family tax benefits.

Tightening of eligibility rules for receipt of social security benefits

The Government has proposed to lower the thresholds under which it assesses eligibility for the income test from September 2017 (this process is called ‘deeming’). The thresholds are proposed to reduce to $30,000 for single pensioners, $50,000 for pensioner couples (combined) and $25,000 per member of an allowee couple. 

What might this mean for you?

If you’re receiving benefit, your benefit may reduce, depending on your income and assets.

Indexation of income thresholds for Commonwealth Seniors Health Card

Income thresholds for the Commonwealth Seniors Health Card will be indexed annually from 20 September 2014. This may help some people to retain or qualify for the card.

Superannuation income to be included in assessment for Commonwealth Seniors Health Card

Deemed income from superannuation pensions will be included in determining eligibility for the Commonwealth Seniors Health Card from 1 January 2015.  This will align the treatment of superannuation income for Age Pension recipients and CSHC holders.  All superannuation income streams held by CSHC holders before 1 January 2015 will be grandfathered under the existing rules.

Seniors Supplement abolished

The Government will abolish the payment of the Seniors Supplement (currently $876.20 for a single person and $660.40 for each member of a couple) to recipients of the Commonwealth Seniors Health Card from 20 September 2014.

Means test exemption abandoned for seniors downsizing the family home

The previous Government’s Housing Help for Seniors trial which was due to run from 1 July 2014 to 1 July 2017 will be abandoned.  This trial would have allowed an exemption from means testing for certain proceeds from the sale of a family home owned for at least 25 years.

Disability Support Pension changes

The length of time that Disability Support Pension (DSP) recipients can leave Australia and still receive DSP will be reduced. From 1 January 2015 recipients will receive DSP for a maximum of four weeks in a 12-month period should they travel overseas, with some exceptions.

The Government has announced compulsory participation requirements (focussing on obtaining employment) for DSP recipients aged under 35 years with an assessed work capacity of eight hours or more per week who have a participation plan.  Some exemptions will apply.

The Government has also announced that DSP recipients aged under 35 years who were granted DSP between 1 January 2008 and 31 December 2011 will have their DSP eligibility reviewed against current eligibility criteria.  Some exemptions will apply.

Tax and general finances

Introduction of new Temporary Budget Repair Levy

A new levy (the Temporary Budget Repair Levy) will apply to high-income earners from 1 July 2014 until 30 June 2017. The 2% levy will apply on individuals’ taxable income over $180,000 per year.

What might this mean for you?

If your income is over $180,000 a year you’ll pay a temporary extra 2% levy (i.e. tax) for the next three financial years, for example, on taxable income of $200,000, the levy will be $400 ($20,000 x 2%).

Abolition of Dependent Spouse Tax Offset

The Dependent Spouse Tax Offset (DSTO) will be abolished from 1 July 2014. However, the Dependent (Invalid and Carer) Tax Offset (DICTO) may be available to taxpayers with a dependant who is genuinely unable to work because of a carer obligation or a disability.


This information is current as at 14 May 2014 and may be subject to change. It is general information only and doesn’t take into account your personal objectives, financial situation or needs. Before making a decision you should consider these and the applicable Product Disclosure Statement (PDS) and receive professional advice. Issued by Suncorp Portfolio Services Limited (ABN 61 063 427 958, AFSL 237905, RSE Licence No L0002059) (Trustee).

Tags: Super