Your relevant Budget summary: The short, the long or the video version – your choice

Last year I branded the federal budget as boring, I won’t be doing the same this year! It’s a tough budget with all Australians told to bear the burden.

Tony Abbot has dubbed it “pain with a purpose” and according to Federal Treasurer Joe Hockey, “the economy is growing at less than normal speed and the time to fix the budget is now.”

For families, there is a focus on healthcare and education; for high income earners, a new tax just for them; for pensioners – new eligibility rules; and for the rest of us – a little bit of extra super.

For anyone who just wants an absolute bare bones budget breakdown, I’ve prepared a summary of the main points below. At the very least you can pretend to care if one of your friends or family members raises the matter.

And for anyone who would like a more comprehensive look at what this year’s Federal Budget involved, I’ve catered for your taste too by including some links to a much longer report and even a video.

First, the summary.

Personal Taxation

• A levy of 2% will apply for three years to incomes over $180,000 pa, starting in 2014/15. It will increase the top marginal tax rate to 49%.
• The levy will increase the Fringe Benefits Tax rate to 49% for three years, starting on 1 April 2015.
• Tax offsets available for dependent spouses and mature age workers will be abolished on 1 July 2014.
• Income thresholds determining the Private Health Insurance Rebate and Medicare Levy Surcharge will not increase for three years, starting in 2015/16.
• Interest on HELP debts will increase, with a maximum rate of 6% pa from 1 June 2016.

Superannuation

• People who make after-tax (non-concessional) super contributions from 1 July 2013 that exceed the cap will have the option to withdraw the excess amount plus earnings on the excess. Currently these excess contributions are taxed at 46.5%.
• The timeframe for increasing the Superannuation Guarantee contribution rate to 12% will be amended. The next increase, to 9.5%, will occur on 1 July 2014 where it will remain for four years. From 1 July 2018, the rate will increase by 0.5% pa before reaching 12% on 1 July 2022.

Social Security

• The age at which people will be eligible to receive the Age Pension will increase to 70 from 1 July 2035.
• From 1 July 2015, Family Tax Benefit – Part B will only be available to families who earn up to $100,000 pa, down from $150,000 pa. This payment will also be limited to families whose youngest child is under 6.
• The amount of income earned to be eligible for the Commonwealth Seniors Health Care Card will increase each year in line with inflation from 20 September 2014. However, tax-free payments from superannuation pensions will be included in the income assessment from 1 January 2015 for new applicants.
• From 20 September 2014, the Seniors Supplement will no longer be payable to holders of the Commonwealth Seniors Health Care Card. However, cardholders will still receive the Clean Energy Supplement.
• People receiving the Disability Support Pension under age 35 may need to undertake a compulsory workforce participation plan.

It’s important to note that at this stage, the measures announced are proposals only and may or may not be made law. So don’t go acting on them just yet…

If you’d like to hear more of what I have to say on the matter, click here for a recording of my most recent “You & Your Money” radio segment on 98.1FM Radio Eastern and click here for your more detailed Budget report.

And if you’d prefer to watch a 6 minute youtube budget update, click here.

Talk soon,
Caren

New Credit Rating rules you need to understand

Any time you apply for a loan, your information is shared by lenders for the purpose of assessing what sort of credit risk you pose.  This obviously helps them determine whether or not they're prepared to loan you money or not.

New Comprehensive Credit Reporting changes the way credit information can be shared by lenders and will have a significant impact on whether or not your application for financial credit will be approved.

Up until recently, you really only received a negative credit score if you defaulted on a loan or didn't pay a bill.  But as of 12 March 2014, loan and credit repayment details are just one of the additional pieces of information that lenders can pass on to credit bureaus as part of a new more comprehensive credit reporting regime.

Under the new rules, there'll be a lot more data sharing and a lot more information available to your financial institution. In fact, every time someone misses paying a bill or loan re-payment of more than $150 by more than five days, their credit file is marked and their credit rating is affected.

On the flipside, under the new regulations, the data provided will also include positive information such as how often repayments have been made on time, so you can actually be rewarded for your years of good behaviour.

The type of information your financial institution will be able to obtain as part the new credit checks include:

• If repayments have been made on time over a two-year period;
• If payment of a bill over $150 is more than 60 days late, it will be listed as a default;
• The limit on credit cards that you have applied for;
• The date your credit account was opened, type of account, and when it was closed; and
• If, because of a default, someone has entered into a new varied arrangement for repayments.

For more information on the new regulations, what it will mean for you and other ways you can take control of your credit history, click here.

In the meantime, click here for our brochure on Protecting Your Credit Reputation, which includes more details on the new rules, as well as handy tips for getting yourself a good credit rating, and avoiding a poor rating.

Of course if you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Money" radio segment on 98.1FM Radio Eastern.

Talk soon,

Caren

PS. Special thanks to our Senior Financial Adviser Michael Crowe from whom I pinched a lot of this information!

PPS. Please don't keep me a secret!  If you know someone who'd enjoy this or find it useful, pass it on!