Welcome to the 2014 Federal Budget edition of E-Link.

On Budget night, when announcing that ''The age of entitlement is over…..replaced, not with an age of austerity but with an age of opportunity,'' the Treasurer, Joe Hockey, made it clear that all participants in the economy were expected to share the burden of fiscal repair.

With a mix of increased tax measures and reductions in Government spending, this Budget seeks to reduce the current deficit from $49.9b to $29.8b next year and to $2.8b by 2017-18.

So what does this budget mean for you?

We’ve identified some of the most pertinent changes for our clients, and summarised the details in each of the sections below. 

Regards 

The Bongiorno Team

High income earners hit with Temporary Budget Repair Levy

If you earn more than $180,000, you be liable to pay the temporary budget repair levy of 2%. When combined with the increased Medicare levy from 1.5% to 2% this increases the top personal marginal income tax to 49% for the period 1 July 2014 to 30 June 2017.

Amendments to fringe benefits tax

While it can be tempting to use salary sacrifice strategies to reduce the impact of the increased marginal tax rate, any decisions need to be made in the light of new FBT rules and rates from 1 April 2015 to 31 March 2017.

Small business depreciation changes

From 1 July 2014, the instant tax write-off for depreciating assets will fall from a maximum of $6,500 to just $1,000.  As a result, if your business needs new equipment or technology, then it may be appropriate to make the purchase before the cap is tightened.

At the moment, small business owners can claim an instant tax write-off for the first $5,000 for motor vehicle purchases, with the balance of the cost price claimed at 15% in the year the vehicle is bought, and 30% in subsequent financial years.  Under proposals announced in the budget, the $5,000 write-off would be abolished.