Federal Budget - Key themes for Doctors

Following the Federal Budget yesterday we outline below our interpretation of the main themes affecting Doctors.

Unchanged (Previously legislated)
• The increase to the Superannuation concessional contributions cap from 1st Jul 14 of $30k for those under 50 years and $35k for those 50 and over means many of our clients should be reviewing their contribution levels.
• The 0.5% increase to the Medicare Levy from 1st Jul 14 will impact on personal taxation from 1st Jul 14.

Personal Taxation
• Introduction of a Temporary Budget Repair Levy of 2% on taxable incomes over $180,000 for the next 3 years

The increase in the Medicare Levy and the introduction of the Temporary Budget Repair Levy is stated to apply to taxable income. In view of this, salary sacrifice, personal deductible super contributions and negative gearing strategies could provide additional benefit for the period of the Levy. 

Child Care Benefit / Rebate

• Eligibility thresholds have been frozen for three years from 1st Jul 2014 so benefit will not reduce but will not increase either.

HELP Debt Changes

• From 1st June 2016 debts will accrue at the 10 year Government bond rate subject to a maximum of 6%.
• Debt will start being repayable at a lower threshold
HELP and HECs will no longer be the cheap form of funding it has been in the past and many Doctors with these debts might reconsider making lump sum reductions to their debt especially given the 5% bonus was not removed.

Family Tax Benefit Changes
• Base rates for Part A and B frozen until 1st Jul 2016
• Part A child “add on” will be removed from 1st Jul 2015
• Part B ceases when primary income earner has income over $100,000 or youngest child reaches 6 years of age.
• Families already in receipt of Part B whose youngest child is ages 6 or over on 30th June 2015 will remain eligible under the transition measures for an additional 2 years.

Health
• A Medical Research Future Fund was announced as part of the budget which is projected to grow to $20bn by 2020.
• Funding of this will be via a proposed patient co contribution of $7 for GP and out-of-hospital pathology and diagnostic imaging services as well as Federal health budget savings. 
The Medical Research Future Fund is certainly an interesting and well received announcement but the method of funding has had a mixed reaction. It will be interesting to see how State Governments react to reduced Federal funding of Hospitals and whether this prompts a call to review the current level of GST.