Increased family assistance
This Budget delivers the largest package of assistance for families ever put in place by an Australian Government, at a cost of $19.2 billion over five years.
Large increases in the rates of assistance are provided and rewards from work improved by relaxation of the income tests for both Family Tax Benefit (A) and Family Tax Benefit (B). In addition, a new Maternity Payment of $3,000 is introduced, which will be increased to $4,000 on 1 July 2006 and then again to $5,000 on 1 July 2008.
More help for families is a further major instalment in the ongoing reform of the Australian family assistance and tax systems to help families raise their children, help them balance their work and family responsibilities and improve the rewards from work.
Building on the tax cuts provided in 2000 and 2003, there will be further large tax cuts in this Budget, with an emphasis on reducing the disincentives of high marginal tax rates.
Tax cuts worth $14.7 billion over the next four years will increase the levels of income at which people start to pay the 42 per cent and 47 per cent tax rates. This will ensure that over 80 per cent of taxpayers face a top marginal tax bracket of no more than 30 per cent for the next four years.
Incentives to save for retirement
Improved incentives for low and middle income people to save for their retirement through superannuation are provided as part of this Budget. The maximum benefit under the superannuation co-contributions scheme is increased to $1,500 to match a $1,000 personal contribution. Additional take-up is expected to exceed 1 million employees. The superannuation surcharge rate will be progressively reduced to 7.5 per cent in 2006-07.