Reaction was mixed and a lot more restrained than last year, after last night’s budget focused on education, lower income earners, defence and the environment.
“I thought in terms of super savings and retirement there wasn’t much [in the budget] at all,” Centric Wealth technical research manager and FPA chair of the superannuation subcommittee Anne-Marie Esler said. “I was a bit surprised that the co-contribution was only increased for contributions made in the last financial year,”
“As the Treasurer said, it’s a budget for the Aussie battler. It will benefit some low to middle income earners definitely.”
Announcing the budget Treasurer Peter Costello said: “Another superannuation incentive from people on low to middle incomes is the co-contribution scheme where the Government matches $1.50 for each $1 a person contributes of their own money into superannuation.
“This means an eligible person who contributed $1000 will receive a contribution of $3000 into their superannuation account. This will boost the superannuation savings of low and middle income earners by $1.1 billion.”
Mercer welcomed additional financial support that the Government provided to low income earners by doubling the co-contribution paid for eligible contributions made in 2005-06. As a retrospective measure, it does not focus on the future, World Wide Partner at Mercer Human Resource Consulting Dr David Knox said.
“This one-off payment does not encourage future contributions from low income earners,” Knox said.
“We would have preferred to see an extension of the co-contribution system so that it provided a clear incentive for more Australians to save in the future.”
Asgard wealth management expert Bryan Ashenden agreed. Ashenden said he would have liked to have seen the co-contribution extended for the next financial year.
Aviva marketing and public relations general manager Tim Cobb said: “There’s been a lot of people making co-contributions and a lot of advisers recommending it for people and it goes to show when the Government introduces something like that it’s worth it. The Government’s made it better for low income earners to build their income year on year. I think it’s good.”
SPAA chairman and Super Concepts head of technical Graeme Colley welcomed the extension to the capital gains tax roll-over for small superannuation funds in the event of marriage breakdown.
“It aligns with the family law court and other super rules. I think that’s good,” Colley said.
Commenting on the budget reaction he said: “It’s certainly much quieter than last year.”
In brief the budget promised:
. One-off doubling of eligible super co-contributions made in 2005-06
. Extension to the CGT rollover to marriage breakdown in small super funds
. Increase in the dependent spouse rebate to $2100 for 2007/08 and beyond
. From 1 July, the 30 per cent tax rate will only apply to income over $30,000
. Low income earners will not pay tax until their annual income exceeds $11,000
. From 1 July 2008, the 40 per cent threshold increases to $80,000 and the 45 per cent threshold to $180,000
. Childcare benefit will increase 10 per cent on top of indexation
. $500 one-off bonus payment for older Australians
. $1000 bonus payment to recipients of the Carer Payment
. $600 bonus payment to recipients of the Carer Allowance
