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AXA’s Federal Budget update 2009 Federal Budget update Ryan Krawitz, Technical Services Manager – AXA Australia.

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Presentation on theme: "AXA’s Federal Budget update 2009 Federal Budget update Ryan Krawitz, Technical Services Manager – AXA Australia."— Presentation transcript:

1 AXA’s Federal Budget update 2009 Federal Budget update Ryan Krawitz, Technical Services Manager – AXA Australia

2  Tax  Superannuation  Other issues – Centrelink  Summary Agenda

3 Personal tax cuts

4 Effective tax-free thresholds 2008/09 $ 2009/10* $ Basic14,00015,000 Allocated pension - taxable component (under age 60) 44,21045,500 Under 18 – unearned income 2,6673,000 * LITO to increase to $1350

5 Using tax savings wisely - co-contribution Taxable income: $ 40,000 Tax saving in 2009/10: $ 300 Personal non-concessional contribution:$ 300 Government co-contribution:$ 300 Total net increase in superannuation:$ % risk free return on tax savings

6 Using tax savings wisely – salary sacrifice How to make a 37% immediate risk-free return? Taxable income: $ 90,000 Tax saving in 2009/10: $ 350 ‘Before tax’: $ 564 Concessional contribution (salary sacrifice):$ Contributions tax: $ (84.6) Total net increase in superannuation:$ 479.4

7 Private health insurance rebate From 1 July 2010, three new tiers:

8 Employee share schemes  Current arrangement: Qualifying share scheme – assessed in the financial year acquired or deferred until later time Non-qualifying share scheme – assessed in the financial year acquired $1,000 upfront exemption available for qualifying share schemes  Effective 12 May 2009: All employee share schemes (qualifying and non-qualifying) taxed in financial year acquired $1,000 up front exemption limited to individuals with taxable income of less than $60,000

9 Limit on concessional contributions Age of memberPrior to 1 July 2009From 1 July 2009 Under 50 at the end of the relevant financial year $50,000$25,000 At least 50 at the end of the relevant financial year (until end of 20/11/12) $100,000$50,000 Impact of the reduction:  Review salary sacrifice arrangements  Review NCAP strategies  From 1 July 2009, individuals under age 50 will only be able to salary sacrifice $11,255 (based on 2008/09 maximum contribution base)

10 Limit on non-concessional contributions Age of member on 1 July of the relevant year Non-concessional contribution cap Under 65$150,000 per year or $450,000 averaged over three years 65 or over$150,000 per year

11 Government co-contribution  Government has reduced the matching rate, however eligibility criteria will remain the same:  Prior to 1 July 2009  150% or $1500  From 1 July 2009 – 30 June 2012  100% or $1000  From 1 July 2012 – 30 June 2014  125% or $1250  From 1 July 2014  150% or $1500

12 Minimum drawdown on account-based pensions  Minimum pension drawdown requirements halved for the second half of the 2008/09 financial year.  Relief extended to the 2009/10 financial year. Minimum drawdown requirements for 2009/10:  Under age 65 – 2%  Age 65 to 74 – 2.5%  Age 75 to 79 – 3%  Age 80 to 84 – 3.5%  Age 85 to 89 – 4.5%  Age 90 to 94 – 5.5%  Age 95 or over – 7%

13 Centrelink – increase in Age Pension age  Qualifying age for the Age pension and Commonwealth Seniors Health Card (CSHC) increased to 67 by  Qualifying age will be increased by six months every two years from 1 July 2017:

14 Increased maximum pension rate  From 20 September 2009, eligible pensioners will receive an increase:  Singles – $32.49 per week  Couples $10.14 per week (combined)  Increase will apply to:  Age Pension  Disability support pension  Veteran’s Service Pension  Income support supplement  War Widow/ Widowers pension  Bereavement allowance  Wife pension  Widow B pension

15 Change to income test taper rate  From 20 September 2009, income test taper rate will increase for every dollar above income free threshold:  Singles from 40 cents to 50 cents  Couples from 20 cents to 25 cents  Transitional arrangements will apply to affected part pensioners:  Part pensioners who are worse off will remain on the 40 cents in the dollar taper rate and reduced base rate (pre 20 September 2009)  The transitional arrangements will apply until they are better off under the new arrangements

16 Other Centrelink changes  Pension supplement  From 20 September 2009, the following are combined into a new pension supplement:  Goods and Service tax supplement  Pharmaceutical allowance  Utilities allowance, and  Telephone allowance.  Seniors supplement  From 20 September 2009, Seniors supplement available to retirees eligible for CSHC or DVA gold card  Annual supplement will increase:  Singles - $  Couple (combined) - $

17 Other Centrelink changes  Commonwealth Seniors Health Card (CSHC) – proposal to include withdrawals from a superannuation fund in the income test for CHSC will not go ahead, however salary sacrifice will be included.  Annual payment for carers will be a legislated annual supplement:  $600 per annum  Pension bonus scheme (PBS):  From 20 September 2009, will be closed to new entrants  PBS replaced with new work bonus  Work bonus - half of the first $500 of employment income will count towards income test

18 Paid parental leave scheme  Federal minimum wage for 18 weeks ($ x 18 weeks)  Funded by the Government  Primary carers will be eligible for the scheme if they: worked continuously with one or more employers for at least 10 of the 13 months before the expected date of birth or adoption have worked at least 330 hours in those 10 months prior to the date of birth or adoption of the child, and have an adjusted taxable income of $150,000 or less in the financial year prior to the birth or adoption of the child.  Available to contractors, casual workers and self-employed.  Recipients will not be eligible for the Baby Bonus or Family Tax Benefit (FTB) Part B  Expected to commence from January 2011

19 First homeowners boost  Extended for an extra 6 months: Between 1 July 2009 and 30 September 2009: $7,000 for the purchase of established homes, and $14,000 for the purchase of new homes. Between 1 October 2009 and 31 December 2009: $3,500 for the purchase of established homes, and $7,000 for the purchase of new homes.

20 Summary  A number of changes require your action for clients to take maximum advantage prior to 1 July 2009  The NCAP strategy is here to stay  Super opportunities for 2009: Converting assets to super $100K concessional contributions Transition to retirement strategies  Need more information – call AXA Technical Services on or

21 Important information The information contained in this document is of a general nature only and does not constitute financial, taxation or legal advice. Before you make any decision in respect of your business you should obtain professional tax or legal advice on your particular needs and financial situation and desired business outcomes. No representation or warranty is made as to the accuracy, timeliness or completeness of this information. The information contained in this document may be rendered inaccurate or wrong due to circumstances beyond our control. AXA Asia Pacific Holdings Ltd and its subsidiaries (AXA) take no responsibility for and accept no liability other than required by law for reliance on this document or its contents. AXA may take any steps available to it under law to limit that liability. Copyright AXA Asia Pacific Holdings Limited 2008.


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