Final thoughts
Being an election budget, there had been much speculation that there would be considerable incentives or rewards for taxpayers as election ‘sweeteners’. While there were some benefits, and these covered the majority of the population (either through tax cuts or one-off bonus payments), their relatively small size should not be overly surprising given the significant reforms to superannuation and the personal income tax regime announced in the 2006-07 budget that have already been legislated.
However, it is the impact of the changes that is important. What you do with any additional savings generated from these budget changes, or changes you make to your investment activities in the future is where the real difference will lie. For example:
Increased savings through reduced taxation may enable personal mortgages and other debt to be repaid more quickly, or free-up additional capital for investment purposes, particularly in relation to investing for retirement.
The doubling of co-contributions for eligible contributions made in 2005-06 is a positive move. Whilst it's too late to do anything to qualify for that increased benefit, you should consider whether you will qualify in this or future years. Making the contribution may put you in a position for increased benefits if future budgets have similar announcements.
- The doubling of asset-test exempt investments in Funeral bonds to $10,000 can help you today if you are eligible for the age pension (or nearing eligibility) and your entitlement is calculated under the assets test. But it can also assist your family by knowing that money has been set aside and arrangements made for a time that will be distressing to them.
With an ageing population, planning for your future becomes even more important. Speak to your financial adviser to determine the best course of action for you to follow today under existing rules, and in the future under the new rules (such as the changed superannuation environment from 1 July 2007). By seeking advice, you’ll be better placed to achieve your goals – both financial and lifestyle.
Getting started
If you’d like more information, talk to your financial adviser. If you don't have an adviser, we can help you find one.