Families and small businesses were among the biggest beneficiaries from last night's Federal Budget announcement, but there were plenty of losers, too. Here's how you might be impacted by the budget pain…
Changes to the childcare system
Hockey confirmed changes to the current childcare system which will see an extra $3.5 billion go into childcare. This is great for lower-income parents who will have most of their childcare costs subsidised, but not so great for pregnant mums.
Working parents will no longer be allowed to "double-dip" by taking payments from their employer as well as the government in a move that could save up to $1 billion over the next four years. Still, childcare centres could see plenty more demand for their services with G8 Education Ltd (ASX: GEM) set to be among the biggest beneficiaries.
Multi-national profit diverters
The government took another step forward in its pursuit of some of the world's largest companies bypassing their Australian tax obligations. While it is a well-known fact that companies such as Amazon.com, Netflix and Google are in its sights, Australian-based companies such as BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) could also be on the hit-list.
It has been speculated that the pair sell their mined commodities to international marketing arms where they pay a lower tax rate than they would otherwise be paying in Australia. If found guilty, these companies could be forced to pay more than twice the amount of tax they are found to be liable for.
As reported by the Fairfax press, News Corp (ASX: NWS) is another company being heavily targeted by the ATO.
Iron Ore
Unfortunately, nothing has changed in regards to Joe Hockey's bleak outlook for the iron ore sector. While he previously stated that the government is contemplating a price of just US$35 a tonne, as reported by Fairfax, Hockey still expects the iron ore glut to continue for years.
That's more bad news for BHP Billiton and Rio Tinto, and even worse for higher cost producers such as Fortescue Metals Group Limited (ASX: FMG), BC Iron Limited (ASX: BCI) and Mount Gibson Iron Limited (ASX: MGX).
Wealthy retirees
In a move that could save up to $2.4 billion over the next four years, the government will cut back on pension payments that will impact wealthy retirees. It is estimated that under tighter means tests, 326,000 self-funded retirees will lose their part-pension benefits as the limit on assets falls to $830,000. In other words, if you have more than $830,000 in assets outside your family home, you will no longer be eligible for pension payments.
While couples with between $500,000 and $830,000 will have their part-pensions cut, those with less than $400,000 in savings would receive a boost in pension payments per fortnight under the proposed changes.
