News Advisor Your life just got more expensive. Here’s why
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Your life just got more expensive. Here’s why

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Living in Australia just got more expensive for most people as a range of new charges and lost government benefits mean that we all have a bit less to spend at the start of the new financial year.

From July 1, the government has timed a multitude of changes to coincide with tax time, many of which will leave consumers out-of-pocket.

And there is nowhere to hide. Cameron Watson, Director of Melbourne-based accountancy firm Watson & Co, says the changes will affect “everyone”.

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“Not only will everybody be paying more tax, but the red tape and bureaucracy involved in all this is horrendous for employers, especially small businesses,” Mr Watson said.

The timing is painful, but Mr Watson says there is no way around it. “To me, it has to be July 1, otherwise you’re going to have all sorts of issues. It’s cleanest to do it in one hit.”

He said most people were unaware that, from July 1, they would be paying a higher Medicare levy, while the top tax rate was now effectively 49 cents in the dollar as a result of the deficit levy on high income earners. “It’s the PAYG employee who is bearing the brunt of the changes,” he said.

Here are the extra charges you will be slugged for in the 2014-15 financial year.

Pensioner concessions slashed

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The Pensioner Concession Card currently entitles those eligible to cheaper medications and discounts on rates, utility bills, car registration, public transport fares and more.

As of July 1, the Commonwealth Government will no longer contribute to this scheme – which amounts to a funding cut of $1.3 billion over the next four years.

The states and territories are yet to respond to this budget measure. If they refuse to pick up the slack, thousands of pensioners will be charged extra for a whole slew of essential services.

Aged care

Those entering a nursing home from July 1 will have their assets included in calculating the fees payable for living expenses and care.

High and low-care services will also be able to charge their residents an accommodation payment, which replaces the up-front bond. Residents will be able to choose this accommodation payment as a lump sum or a daily payment.

On top of the basic daily care fee, aged care residents might have to pay a means-test fee of up to $25,000 per year, based on income and assets. This payment will max out at a lifetime amount of $60,000.

Home care

Older Australians in need of home care will pay more if they have an income of $43,186 or more.

Those earning above the threshold will now be charged an annual income-tested fee of up to $10,000 per year (at a maximum of $60,000 over a lifetime).

Part pensioners will pay no more than $5000 a year, and those on a full pension will be exempt.

Health insurance

Medicare levy increase

The Medicare levy will increase by half a percentage point from 1.5 to two per cent from Tuesday.

This is to fund the National Disability Insurance Scheme, which is being trialled for the first time in areas of Western Australia, Northern Territory and the ACT, and expanding in New South Wales, Victoria, Tasmania and South Australia.

Work for the dole

Work for the dole is also being expanded, which means those on unemployment benefits will have less time to search for work.

This may disadvantage some unemployed Australians, as the additional payment to cover the costs of getting to and from work is only $20.80. Catching the train or buying work clothes could easily put them behind.

Tradies lose out

Some support payments for tradies will be replaced by debts as of July 1.

Apprentices will no longer be able to access Tools For Your Trade payments. Instead, they may be eligible for trade support loans.

Deficit levy

AAP

High-income earners will be hit by a “temporary budget repair levy” for the next three years, starting tomorrow.

Two cents in every dollar over the threshold of $180,000 will be taken by the Tax Office in order to get Australia’s budget back on track.

This levy is predicted to raise $3.1 billion in the next three years.

Tax offsets lost

Two tax deductions will cease to exist on July 1. These are the End to Mature Age Workers Tax Offset and the Dependent Spouse Tax Offsets.

Medical services

The indexation of some services on the Medicare Benefits Schedule (MBS) will be paused for two years.

This means that services like ultrasounds and MRIs will potentially go up in price for those who aren’t bulk billed.

First Home Buyers lose interest

The Government is also getting rid of First Home Saver Accounts, which guaranteed high rates of interest for those saving for their first home.

Carbon tax

The carbon tax increases from Tuesday to $25.40 per tonne (an increase of $1.25). But any costs passed on to consumers will probably be short lived, as legislation to repeal the scheme looks likely to pass through the Senate.

Higher wages and superannaution

Wages increased last year at the slowest annual pace on record.

To help with extra living costs, award wage rates for full-time adult employees will increase by 3 per cent. The minimum wage will also increase to $640.90 per week or $16.87 per hour. Super contributions by employers will also increase from 9.25 per cent to 9.5 per cent.

Employees will be happy, but Chief Executive of Australian Industry Group Innes Willox says the increases come at a bad time for business owners.

“These added costs come at a difficult time for businesses in industry sectors such as manufacturing and retail which are exposed to import competition and experiencing very tough business conditions,” Mr Willox says.

Pollies and public servants take a pay freeze

The salaries and allowances of MPs, department secretaries and all other public officer holders will be frozen at current levels for 12 months.

—with AAP

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