The Budget and what over-60s in Australia need to know

Treasurer Scott Morrison has handed down the federal Budget and there are big changes to superannuation. It’s bad news for

Treasurer Scott Morrison has handed down the federal Budget and there are big changes to superannuation.

It’s bad news for high income earners and people with superannuation balances of over $1.6 million, but great news for low income earners who want to contribute more to their accounts. There are also changes to personal, small business and multinational income tax with the Treasurer stating, “Any increases in tax revenue as a result of measures contained in the budget have been re-invested back into lower taxes, not towards fuelling unsustainable higher spending.”

We know breaking down the Budget can be a little tedious so here are the main things you need to know:


From the 1st July 2017, the Government will introduce a transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase, limiting the amount of tax-free income wealthy retirees can earn. This will be applied to both current retirees and to individuals yet to enter their retirement phase. The tax on concessional contributions will be increased from 15% to 30% for those earning over $250,000. The annual cap on concessional super contributions will be reduced to $25,000 and a new lifetime cap on non-concessional contributions of $500,000 will be introduced. Morrison says these changes will affect only the top 3% of superannuation members.

On the other hand the government is introducing a Low Income Superannuation Tax Offset which will allow individuals with an adjusted taxable income of up to $37,000 to receive a refund into their superannuation account of the tax paid on their concessional contributions, up to a cap of $500.  The offset is also designed to increase flexibility for low income earners allowing more self employed people to claim tax deductions for personal super contributions, encouraging partners to make contributions to their low-income spouses super accounts, removing restrictions that prevent people aged between 65 and 75 from making contributions to their superannuation and allowing people with interrupted work (predominantly women and carers) to rollover unused concessional caps to make extra contributions. These superannuation reforms will raise $2.8 billion over four years.


The Government will provide an estimated additional $2.9 billion over three years for public hospitals to improve patient safety and reduce avoidable hospitalisations. Morrison also mentioned that they will take a new approach to essential dental services for children and low income adults, but did not elaborate.  The government will also establish a savings fund for the National Disability Insurance Scheme. Savings made from better targeting of the welfare system will be reinvested back into the NDIS to contribute to the current funding gap in the scheme.


The government will increase the excise on tobacco products by 12.5% each year from 2017 to 2020, bringing the cost of a single packet of cigarettes up to $45 in 2020. 69% of the ticket price will be tax. Scott Morrison says this will raise $4.7bn over the next four years.


The middle tax threshold will increase from $80,000 to $87,000, saving $6 a week for people earning $80,000 or over per year.

Morrison also announced: the small business tax rate will be lowered to 27.5 per cent and the turnover threshold for small businesses able to access it will be increased from $2 million to $10 million; new laws to prevent tax avoidance from multinational companies will be backed up by a taskforce of 1000 ATO staff raising$3.9 billion in revenue over the next four years; a new work for the dole scheme called PaTH – Prepare, Trial, Hire, which includes training and an upfront payment of $1000 and then subsidies of between $6500 and $10,000 for businesses who hire eligible youths; a $594 million plan for an integrated inland rail link connecting Brisbane and Melbourne and a plan for an advanced defence manufacturing industry with 9 frigates, 12 offshore patrol vessels and 12 new submarines to boost defence capability and jobs.

How will the changes affect you?

  1. Susan Jenkins  

    When will enough be enough putting all the tax burden on the poor smokers ?What about a sugar tax ?Save the nation on health and dental costs .A win win all round. The smokers have done the heavy lifting for too long. Now it’s sugar’s turn!!!!

    • David Walker  

      If all the smokers in Australia decided to quit that would be a massive loss to the government,so how would they recoup that loss by increasing every tax possible it’s a double edged sword on the one hand they have to advise you to quit on the other they hope you don’t .How about putting the tax up on all forms of alcohol it is just as harmful as tobacco and more people drink than smoke,but as you say it’s always the smokers who feel the brunt.

    • Fran  

      I agree, let sugar and alcohol be taxed further. I feel for all the people going through a mental illness . Often they have no job, little money, can’t afford alcohol and anyway it interrupts with some medications and is not recommended. Most of us have a vice or two but when a mental illness strikes there is little to enjoy.

  2. Fiona Williams  

    They also havent taxed alcohol, one of the biggest killers. Could it be because all politicians drink? Drinking, over indulgence puts more people in hospital with fights. If all australians gave up smoking the government would have to get their tax so ewhere else, thousands of people would be out of work and company tax and excise would disappear. The tax burden should be shared, they need to stop picking on one group in society.

    • Wayne Rogers  

      Hey Fiona,
      So you want to tax the vast majority of responsible moderate drinkers to save a few boozy idiots from themselves?
      Typical nanny state nonsense.
      It’s ABUSE of alcohol that is the killer!
      Bet you vote Greens or Labor.
      They really love this “tax the majority for the sake of a tiny minority” crap.
      Education is the answer not another tax!

    • Alcohol is taxed at 29% wine equalisation tax on the wholesale price and also excise. This is why alcohol is so much cheaper when you travel overseas and get your duty free supplies.

  3. Jim Molesworth  

    Although my wife and I have an SMSF, I don’t disagree with the two big measures in the 2016 Federal Budget i.e. the $500K lifetime non-concessional cap, or the $1.6M no tax pension balance.
    But if we are targeting excessive tax minimisation, I would have liked to see negative gearing reined in a bit, say reduced to one or two properties per taxpayer. Maybe it was too sensitive in an election year, and might come out next year if the LNP is re-elected.

    I WAS hoping for an adjustment to the Centrelink deeming rates. The current upper band 3.25% is ridiculous. An SMSF simply cannot get that rate anywhere. The highest rate I have seen recently for a term deposit at one of the big banks was 3.1% and that was a special deal for good clients.

    I think the rates are overdue for an adjustment downwards.

  4. fred smith, esq  

    when will we start to get a reduction in private health for NON smokers.

    Tax them fine, but that does not flow on to normal people, hence a private health reduction in costs would be immediate and beneficial for non-smokers.

    Sugar tax …. we will see what happens with other countries first, but we need to have a fair and balanced tax system, not one that is biased to either rich or poor, but balanced. One that rewards people for studying and getting ahead instead of screwing them over. Basically yes I am tired of paying an stupid amount of tax for what, support those who cant be bothered working or studying.

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