As expected, the 2013/14 budget given on Tuesday night was tougher than previous budgets. There has been a lot of talk in the media (and amongst economists and accountants) about what measures have come out of the budget but one important question is:
What do I need to do now?
Below are a few things you might want to consider, in order of the time required:
- Get pregnant in the next 2 weeks
The baby bonus will be integrated into the Family Tax Benefit part A in 9 months and 2 weeks, so to be eligible for the existing baby bonus you need to get pregnant in the next 2 weeks.
- Spend $2,120 on medical expenses by 30 June 2013
The tax offset for 20% of out of pocket medical expenses above $2,120 (2013 year rates) will be phased out, with some exceptions for aged care.
If you claimed the offset in 2013, you should be able to claim again in 2014 and 2015 (assuming you had the medical expenses), so it might be worth trying to claim this offset in 2013, to allow you the opportunity to use it in 2014 and 2015.
- Consider paying part of your uni fees or HELP debt before 1 January 2014
After 1 January 2014, the current 10% discount for paying part or all of your uni fees upfront will be scrapped, along with the 5% discount for repaying $500+ voluntarily from your HELP debt.
- Consider improving your current job skills before 1 July 2014
The government announced capping self-education expenses at $2,000 from 1 July 2014 (the 2015 financial year). Note self-education expenses are only deductible when they relate to your current job (eg. you can’t claim your science degree books against your restaurant salary). Given this cap, you might consider starting a course to improve your job skills now to allow you to claim deductions before the cap.
What else do I need to know?
The government announces the budget, however there is a lot more that needs to happen before the budget becomes law. Given that the Liberals might win the election in September, it is more likely that not all of the budget will become law and changes will be made.
A lot of the tax rules and rates remain the same (or similar)
- Individual tax rates will remain at a similar level from 2013 to 2015. Although the tax free threshold has increased to $18,200, the low income tax offset has decreased accordingly, so medium earners will pay $300 less tax than last year.
- Aside from the above, rules for claiming tax deductions remain the same – make sure you keep good records.