This year’s Federal Budget has limited implications for our wealth management clients.
The main change relates to taper rates for eligibility for the age pension. This is likely to affect clients whose assets are currently borderline with the assets test.
Pension entitlements are currently reduced by $1.50 for every $1,000 of assessable assets above the asset-test threshold. From 1 January 2017 however, the proposed taper rate will reduce pension entitlements by $3.00.
People with assets above the following thresholds are likely to experience pension reductions due to the asset test changes:
- Single homeowner with assessable assets over $289,500
- Single non-homeowner with assessable assets over $537,000
- Homeowner couple with assessable assets over $451,500
- Non-homeowner couple with assessable assets over $699,000
Clients who were already receiving the full pension or for whom the income test is more dominant may not be affected by the changes.
We are currently reviewing each client’s circumstances against these planned changes. If affected, we will contact you to discuss if or what adjustments need to be made to your financial arrangements.
There are no changes to superannuation, other than a loosening of the release rules relating to people suffering a terminal medical condition.
However there are other changes affecting other parts of the economy, including small business. You can read our summary of the changes affecting this sector here:
5 Accounting and Tax: The Federal Budget – What do the Changes Mean?
As always, if you have any questions about anything raised here or your financial situation, please don’t hesitate to contact us.