Judgment day is upon us
Nicole Pedersen-McKinnon outlines what to expect now the carbon tax has arrived.
Nicole Pedersen-McKinnon outlines what to expect now the carbon tax has arrived. Not since the GST was introduced in 2000 has the ticking over of a financial year held such potential to affect your hip pocket. And not since then has there been so much argy-bargy about by how much.The fact is that when it comes to the change generating all the debate the carbon tax no one knows. The tax is not on us - it's on our 300 biggest polluters. So it will be up to them to what extent they pass it on.Here's what you need to know to deal with that and a raft of other big tax reforms that today's new financial year heralds.CARBON CONFUSIONLots of pressure groups and organisations have had a crack at estimating how much more we'll pay on electricity, gas and food.The price of the average $25 birthday cake - the big issue when the GST was introduced - is set to increase less than 10?, says an economist from Murdoch University in Perth.Treasury estimates costs across the economy will rise only 0.7 per cent but there is at least the theoretical potential for businesses struggling anyway to engage in a bit of price gouging.Of course, it's up to us whether we will wear all this or, instead, shift our business to more competitive suppliers, encouraging greener production.There's also the matter of compensation. The government's household assistance package has already delivered payments of $69 to $250 to families, seniors and individuals on benefits. From today, the tax-free threshold will also triple to $18,200, bestowing tax cuts of an average $300 a year on everyone earning below $80,000 (people on above that will get just $3). In addition, some government payments will increase from March 2013.All up the government, supported by recent independent calculations, puts the likely total weekly cost per family at $9.90 ($3.30 for electricity, $1.50 for gas). The average assistance is said to be $10.10.In terms of job security, industries deemed to be put at risk by the cost imposition, such as the steel industry, will also receive assistance.But all the fuss might be for nothing anyway - the Coalition has vowed if elected to repeal the tax on day one.SUPER SLUGBig changes come into effect today when it comes to your retirement savings.First, the golden giveaway that was the co-contribution scheme - a matched super contribution of up to $1000 for lower-income earners - is being scaled back. The maximum will halve to $500 and the top-income limit for qualification will drop from $61,920 to $46,920. It's still money for nothing, so worth trying to find a spare $500.Then there's the large, unexpected cut to the amount fiftysomethings with super balances less than $500,000 can pay in before tax each year, from $50,000 to $25,000. This is supposed to be a temporary, balance-the-books measure, but do you really believe it?The GFC-battered group now faces an uphill battle to rebuild its retirement kitty. For the rest of us, the inability to tip in large amounts at the last minute means we need to save the maximum $25,000 (including employer contributions) each year from age 35 to reach the magic million.On the positive, if you make below $37,000, you'll get an automatic $500 a year in your fund from the government to redress the 15 per cent tax on super contributions. Meanwhile, very-high-income earners (more than $300,000) are also contending with a 100 per cent increase in tax on contributions: from 15 per cent to 30 per cent.HEALTH HITThe cover carrot has been slashed and the stick enlarged. The 30 per cent rebate for having private health will phase down from $84,000 for singles and $168,000 for couples, disappearing entirely at $130,000 and $260,000 respectively. But if this tempts you to leave, the Medicare levy surcharge with which you'd be slugged is ratcheting up from 1 per cent to 1.5 per cent by those $130,000 and $260,000 incomes.What to do? Switch to a more competitive product. Chances are you could keep your premiums the same and increase cover quality. Remember that no waiting periods apply in a new fund if you already qualify for treatment with an old.SPOUSE EXPENSEThe dependent spouse and mature-age rebates were a budget casualty. If your spouse was born from July 1, 1952, you will no longer get the former, and the latter will be phased out for July 1, 1957, birthdays on.LEVY LEVITYThe flood and cyclone levies: gone.Nicole Pedersen-McKinnon is the editor of Smart Investor magazine, afrsmart investor.com. Twitter @NicolePedMcK.