Last night’s budget was a fairly dull affair, with the government having leaked most of the significant details in advance in an effort to avoid repeating their issues from last year.
From the perspective of you as an investor it is a case of no news is good news. There have been no changes made to negative gearing, superannuation, family trusts or personal income tax rates. These will be reviewed as part of the White Paper on Taxation, however at present it is a case of ‘as you were’.
So how will you be impacted?
Firstly, it is worth remembering (particularly in light of the failure to pass much of last years proposed budget measures) that these are proposals at this stage and will need to receive approval from the Senate before becoming law.
There has been no suggestion of any change to the public hospital funding cuts announced in the last budget, or of the freeze on Medicare rebates both of which will continue to impact you. The government has however backed down on the plan to redefine the Level A and B GP Consultations, and to reduce rebates by $5 for common GP consultations.The planned policy of increasing the cost of prescription medicines by $5 from January continues. There will be a reduction in the rebates provided for health checks on children aged 3-4 from $58 to $37. There will also be a $6 incentive paid to GPs who identify children who miss immunisations and provide them with a catch up shot.
If you are employed by a Public Hospital or other not for profit and take advantage of the Fringe Benefits Tax Concessions, there will be a cap of $5,000 placed on the Meal and Entertainment expenses allowance, where currently this has been unlimited.
There are changes to the way car expenses are calculated, but this will not impact on leasing or Salary Sacrifice Arrangements. There will now be a flat rate of $0.66 per kilometre payable irrespective of the size of your car, although you will still be able to calculate via the log book method.
If you choose to work overseas for a period of time and still have an accumulated HECS and HELP debt you will now be liable for repaying this debt in the same way you would if you worked in Australia.
Paid Parental Leave – from 1/7/2016 you will no longer be eligible for the Parental Leave Pay scheme where your employer provides a similar scheme.
Child Care Changes and Nannies – The Childcare Subsidy will be changed and simplified from 1/7/2017 that may see your eligibility for benefits increase.
- For (combined) incomes of between $65,710 and $170,710 you will receive 85% of the actual fee or benchmark rate (whichever is lower) with no cap
- For those families on $170,710 to $185,710 you will receive 50% (with no cap)
- For those families earning above $185,710 you will receive 50% subject to a $10,000 cap per child.
There will also be an activity test which will determine the level of hours of care eligible for the subsidy.
A new Interim Home Based Carer Subsidy Programme will subsidise care provided by a nanny in a child’s home from 1 January 2016. The pilot programme will extend fee assistance to the parents of approximately 10,000 children. Families selected to participate will be those who are having difficulty accessing child care with sufficient flexibility. Support for families will be based on the CCS parameters, but with a fee cap of $7.00 per hour per child.
Business and Practice Owners
The tax rate for incorporated businesses with a turnover of under $2 Million p.a. will reduce to 28.5% from 1/7/2015. Any dividends paid out will however maintain the franking credits of 30%. For those operating as sole-traders, partnerships or trusts will receive a 5% reduction in their income tax payable, subject to a $1,000 cap per individual per year.
For new businesses there will be an immediate deduction for professional expenses associated with starting a new business, rather than deducting them over 5 years.
For small businesses (turnover under $2 Million p.a.) there will be an immediate tax deduction on new capital equipment of $20,000 or less. This will significantly reduce the cost of some of the equipment needed by your practice. There is an opportunity for the rest of the financial year for a slightly increased benefit as the company tax rate will still be 30%, compared to 28.5% from 1 July meaning the deduction will be slightly higher.
Rural Doctors Incentives – there will be changes to the calculation of bonus payments for rural doctors to ensure they are better targeted. This will focus these incentives on those working in rural and remote communities rather than outer metro or large regional areas.
You will likely be paying more for your downloads of music, movies and ebooks with the GST to be applied to digital products imported by consumers from 1 July 2017.
There has been confirmation of one change that may benefit your patients suffering a terminal illness. They will now be eligible to access their superannuation benefits without penalty if they have a life expectancy of two years or less, rather than the current one year. This may make this difficult time easier for people in this position.
Should you have any questions in relation to this or any other issue, please feel free to contact us on 02 9959 0550 or firstname.lastname@example.org