Impact from the Federal Budget to affect the NFP and Public Health sectors.
The Medicare levy will increase to 2% from 1 July 2014 to fund the Government’s Disability Care Australia reforms. Revenue raised from this measure will be paid into a dedicated fund administered solely for the purpose of meeting Disability Care funding needs.
In addition to the Medicare Levy, higher income earners without sufficient private health cover will continue to be assessed to a further 1% surcharge.
The increase in the Medicare Levy brings the effective top marginal tax rate to 47%. A number of tax laws apply the top effective rate as a penalty rate of tax. As a consequence, a Bill released today indicating that the new FBT rate of 47% is proposed to come in as of 1 April 2014 – so no transition despite higher Medicare Levy only being effective from 1 July 2014.
- For Type 1 the new gross up factor will be 2.0802 meaning that allowable packaging cap will become $14,421 for NFP and $8,172 for Public Hospitals
- For Type 2 the new gross up factor will be 1.8868 meaning that the allowable packaging cap will become $15,900 for NFP and $9,010 for Public Hospitals
- For the majority of staff utilising salary packaging benefits this will mean a reduction of $150 for NFP organisations and $85 across the Public Hospital sector each FBT year, April to March