... the tough stop spending.

When the income hitting our bank accounts drop we are faced with two decisions we either keep spending as if nothing has changed and start dipping into our savings or we cut back on our expenses to make sure we're still saving towards our long term goals. It seems the government is no different from you and I as we see the effects the European saga being played out. With the government revenues falling and confidence wavering, there is little choice but to cut back on the spending and maintain the surplus target. What this means is that there will be changes in the benefits we will receive. The two that will be discussed here are cuts to the government co-contribution and baby bonus.

From 1 July 2012 the government co-contribution will be cut from a maximum of $1,000 to $500 for incomes up to $31,920 and a complete phase out for incomes from $46,920, compared to $61,920 this year. The Assistant Treasurer, Bill Shorten, said the co-contribution was being cut due to introduction of the new low income super contribution. Low income earners, under $37,000 pa, will receive a payment of the 15% contributions tax paid directly into their superannuation fund. So the low income earners will benefit at the expense of the middle income earners.

Also from 1 July 2012 indexation on the baby bonus will be paused for 3 years and from 1 September 2012 the rate will be reset to $5,000 per child. The current rate of the baby bonus is $5,437. Let's just hope the prices of those plasma TV's keep coming down in line with the bonus cut.

These changes among others such pausing on contribution caps, fringe benefits tax on living away from allowance, dependant spouse offset tax etc should be discussed with your financial adviser to see how this affects your personal situation. Call Announcer today to discuss the opportunities and/or steps that should be taken to assure you achieve your financial goals.