The economy: what to expect in 2015
February 2015
The Reserve Bank of Australia (RBA) meets again in early February with economists torn on whether interest rates will fall at that point. Previously, the Reserve Bank Governor stated that inflation was an impediment to cutting interest rates.
The last Federal Budget contained a series of severe cuts. Some of those have passed Parliament and become law while others are pending the outcome of negotiations with the minor parties, while others have died a slow and protracted death.
- Carbon Tax - abolished.
- Mining Tax - abolished along with the associated business initiatives such as the loss carry back rules, accelerated depreciation for motor vehicles and the instant asset write off.
- Superannuation guarantee (SG) - rephased as part of the mining tax repeal. Now, the SG rate will remain at 9.5% until 1 July 2021.
- School kids bonus - was to be abolished as part of the mining tax repeal but is now means tested until 31 December 2016, before being abolished.
- 2% Debt Tax - applies between 1 July 2014 until 30 June 2017 to those with annual taxable incomes over $180,000. In line with the debt tax, FBT rates will also increase from 47% to 49% from 1 April 2015 until 31 March 2017.
- Biannual indexing of fuel excise - introduced by stealth as a tariff proposal.
- Family Tax Benefit reform
- The $7 fee for GP visits
- An increase in the pension age to 70
- The 6 month wait for unemployment benefits
- Deregulation of University fees.
- The Coalition's paid parental leave scheme also seems to have faded from view.
To bring debt under control, the Government needs to cut spending somewhere or increase taxes. At this stage, it's uncertain what and how this might be achieved. Cutting spending will rely on amending legislation passing the Senate with agreement by the minor parties - something the Government has not been able to achieve to date.
On the tax front, the Government's Tax White Paper is due out within weeks. The much anticipated review of the tax system is reported to outline the need to change the current system's reliance on personal and corporate taxes including broadening the base and increasing the rate of GST, and changing how superannuation is taxed.
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Disclaimer
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.
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