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The new Labor government’s first budget was squarely aimed at helping working families, while also delivering a hefty surplus of over $20 billion. Viewed by many financial pundits as fairly conservative, and on the whole fiscally responsible, Treasurer Wayne Swan’s plans contained very few proposals likely to shake up the current financial planning strategies of Australians.

In particular, the superannuation regulatory environment has been left largely untouched. Concerns that the government may introduce a tax on pension earnings have, thankfully for Australia’s baby boomers, not come to fruition.

However, it will be no longer possible to hide salary sacrifice contributions from the income radar. Anne-Marie Esler, technical research manager at Centric Wealth, explains: “From 1 July 2009, all salary sacrifice contributions will count towards the income tests for certain government benefits. So the strategy of reducing taxable income, by salary sacrificing into super to maximise a government co-contribution entitlement, will no longer be effective.”

On a positive note, the introduction of new personal income tax thresholds could mean that you have more money to play with. MLC’s technical services manager, Andrew Lawless, believes that the tax cuts, which will be staggered over the next three years, will eventually be quite substantial.

He explains: “While someone earning $100,000 will receive an annual tax savings of $2,150 from 2010/11, someone earning $180,000 will receive an annual saving of $6,050. There will therefore be an opportunity for clients, particularly at the higher end, to use these tax savings for investment or to reduce debt.”

The government has also increased the low income tax offset over the next three years, making the tax-free threshold $16,000 from 2010/11. Lawless says that as a result, income splitting with a low income spouse is likely to become an even more attractive strategy.

Still, it will now be more difficult for higher income earners to qualify for family tax benefits, with Lawless noting that although the benefit will be reduced depending on the income of the secondary earner, it won’t be available at all if the primary earner receives more than $150,000 per annum. High earners will also lose the baby bonus payment, as this will now be means tested and only available to families earning $75,000 and less.

The introduction of First Home Saver Accounts could potentially result in new planning strategies, and Esler says that they have already begun examining the benefits on behalf of clients looking at the advantages of investing for their children or grandchildren.

Changes to childcare benefits are likely to be viewed with mixed emotions. While these benefits will now be subject to means testing, the government has increased the rebate available from 30% to 50% of out-of-pocket expenses. Lawless comments: “While some people will certainly be worse off, depending on their childcare usage others will be much better off as the higher rebate will more than compensate for the loss of the minimum childcare benefit.”

Overall, from a financial planning perspective, Esler says that the budget contained no surprises or changes that will substantially impact their client’s financial plans. In fact, she hopes the best is yet to come.

“We would like to see the government consider some of the recommendations made by industry bodies, such as allowing tax deductibility of financial planning fees, removing the work test for those over 65 contributing to super, and abolishing the 10 per cent rule for deductibility of super contributions.”

She also hopes the government will fulfil its promise to review Australia’s current taxation system. “We hope this will be beneficial for our clients, and are pleased that tax free super for over 60s is beyond the scope of the review!”