How the Budget will impact Independent Contractors and Businesses

Author:  Raj Sesha, Director SDP Solutions and Tax Agent

Highlights for Independent Contractors and Businesses

With the Federal Budget 2014 announced, there was no doubt that we would all be affected in one way or another.  We all guessed right in what we were expecting… big cuts and changes.  Here we have focused the changes in the Budget that will affect businesses and independent contractors such as, tax, super and Medicare. The Key question that business will be asking, in my opinion is, what will be the impact on job growth and consumer sentiments as a result of this budget.

Company Tax

1.5% rate reduction for SMEs  (we will have to wait one more budget before it is ratified though) 1.5% Paid Parental Leave Levy Abolish Mining Tax Abolish Carbon Tax $10,000 subsidy over 24 months for businesses who employ over 50s. Subsidies for businesses who employ job seekers who haven’t got a job after 6 months of work for the dole.

Superannuation

Choice to withdraw excess contributions from 1 July 2013 if the non-concessional contributions cap is breached – a more sensible approach to the excess contributions dilemma. Super guarantee charge increases to 9.5% from July 2014 to 30 June 2018.  Will reach 12% on 1 July 2022.

Individuals

Temporary levy for 3 years.  Starting 1 July 2014: 2% additional tax for taxable incomes over $180,000 Universities to be deregulated by 2016 – some degrees could cost up to $200,000 All current family assistance payments to be frozen for two years Family Tax from July 2015 Family Tax Benefit Part B to cut out at income of $100,000 $750pa for each child aged 6 to 12 for low income single parents Dependent spouse tax offset abolished The Pension Age will rise to 70 in 2035.

Medicare

Reduced rebates by $5 from 1 July 2015 General patients to pay $5 more and concessional patients to pay 80c more for prescription drugs. Patients to contribute at least $7 for GP visits, Blood tests and X-rays Free for children under 16 – after the first 10 visits per year

The above information is a general summary of the budget and for any specific advise please call me, Raj Sesha on 02 9233 2233.