The Australian Budget 2015 – What are the key threats to your financial well-being?

Australian Budget 2015

Described by ABC News as the Treasury “taking a year off”, the 2015 Budget has more significant measures than the Government are being given credit for with a raft of measures being introduced including those covering Families, Pensions, Welfare and Education creating many winners and losers.

As an Australian expat what does all this mean for you?

Until now there has been no requirement for an expat to make payments towards their Higher Education Loan Programme (HELP) loans.

This is changing:

  • From July 2017, if you have Australian government HELP debts and are working overseas you will be required to make payments on your loan. You will have the same loan repayment obligations as those who reside in Australia, meaning that if you earn more than the threshold (A$53,345 in 2014–15) you will be required to contribute a portion of your income to loan repayments.
  • From January 2016, anyone with a HELP debt leaving Australia for more than six months will be required to register with the ATO, while anyone already overseas will be required to register before July 2017.

Changes announced to pensions mean that you should review your retirement provision, as you will need to provide more of your retirement income than before. (Speak to your AAM financial planner now to discuss how you can improve your retirement provision.)

  • The Government has announced it will adjust the thresholds for assets tests for pensions, meaning 172,000 pensioners at the lower end of the pension will be better off, while 81,000 pensioners who currently claim the part pension will no longer be eligible.
  • Previously singles over the age of 65 with assets (excluding the family home) of less than $775,000 were able to claim the part pension, however the new limit will now be $550,000.
  • The Government confirmed these changes would replace efforts to change the way the pension was indexed, which would have had a greater negative impact to pensioners over the long term.
  • The Government plans to save $168.6 million over four years from January 2016 by changing pension eligibility requirements for those living overseas. Australians on some types of pension, including the disability pension and the age pension, will have the rate of their payments cut after being overseas for more than six weeks, down from the previous limit of 26 weeks.
Returning to Australia

The tax shock of returning home is likely to be greater in the future as whilst middle-income earners stand to benefit from a range of Government policies, including the childcare changes, some of the burden of the return to surplus will fall upon them through bracket creep.

Bracket creep occurs when increases in wages – to account for cost-of-living pressures- push people into higher income tax brackets.

These wage increases are normally offset by adjustments in the tax brackets, but the tax brackets are budgeted to remain steady into the future.

These changes mean that tax efficient investing is more important than ever and the sooner you make a start, the sooner you can achieve “tax freedom” for your investments. Speak to your AAM financial planner now to discuss how you can protect yourself from bracket creep and higher taxes.

Ian Black
Head of Wealth Solutions
AAM Advisory Pte Ltd


The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any securities/products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of the future performance. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data.­­­