2015 Federal Budget Update

2015 Federal Budget Update

Overview In May, the Federal Government handed down its annual budget. Income tax rates were left unchanged and no new taxes on superannuation were introduced. The budget delivered mixed news for people currently receiving the age pension. The Government has decided not to proceed with the indexation of the Age Pension payment rates linked to inflation only. They will also maintain the current deeming thresholds. In addition, the Assets Test threshold for the full pension will be increased. However, the maximum level of assessable assets for a part Age Pension will reduce. Pensioners who lose their pension entitlement will automatically be issued with a Commonwealth Seniors Health Card. Please refer below for details. The announcements are proposed changes which will require passage of legislation before it can be implemented. Increase in Assets Test Threshold From 1 January 2017, the Assets Test thresholds for the full pension will be increased. The current and proposed thresholds are detailed below: Assets Test threshold for full pension(20 March 2015) Assets Test threshold for full pension(1 January 2017) Single, homeowner $202,000 $250,000 Single, non-homeowner $348,500 $450,000 Couple, homeowner $286,500 $375,000 Couple, non-homeowner $433,000 $575,000 An increase in the Assets Test thresholds for full pension means retirees can have a greater amount of assets (in addition to the family home) before their pension entitlement is reduced. Increasing of the Assets Test taper rate From 1 January 2017, the Assets Test taper rate will increase from $1.50 to $3.00, effectively reversing the 2007 decision to halve the taper rate at that time. The current and proposed thresholds are detailed below: Assets Test threshold for part pension(20...