Sent: 28-04-2009 10:47:01
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Federal Budget: Little time to react - prudent to get in quickly?
Once again the rumours are flying around about the Federal Budget and likely tax and/or super changes.
Thus far the government seems intent on soaking the 'rich' for its (the government's) own profligacy towards the deserving 'poor'. The 'rich' are those who earn more than $100,000 (single) and $150,000 (family).
Last week Lester pointed out that the average US family pays very little tax at a US Federal level but these low income taxpayers were receiving the majority of hand-outs and tax cuts.
Lester wondered what happens in Australia. In short, the same. The majority of income taxes are paid by people who earn between $100,000 and $400,000 in taxable income. (Similarly the majority of company taxes have been paid by larger corporations.) The government simply cannot afford to hand out too much money to this small 'river of gold'
Very few of these moderate income earners received tax cuts in the two Rudd Government 'fools gold' economic stimulus packages. Further the middle income earning families who already pay very little, if any, tax because of the various tax breaks available - family tax benefit, government co-contribution, child care benefit, etc - have been the main beneficiaries of these hand-outs.
As in the US, our government has partly sold these hand-outs as tax cuts. I'm yet to work out how you get a tax cut if in net terms you actually don't pay tax.
One of my Sydney based colleagues told me that at the moment it's impossible to purchase a moderately priced (under $2,500) big screen TV and urgent orders have been forwarded to Asian based manufacturers. Unsurprisingly there appears to be plenty of supply at the expensive end (above $4,000) of these devices.
There are many rumours traveling around now that Transition to Retirement pensions will be curtailed in some way. It also seems that some sort grandfathering will apply to those who have already reacted.
It also seems that some sort of additional tax measures will apply to higher income earners superannuation contributions. Perhaps by reducing the various maximum thresholds that apply.
It seems clear that some people have very little time to react positively to these very strong rumours before budget day which will is 12 May.
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