2017-18 Federal Budget: SNAPSHOT

Yesterday the Federal Government handed down its 2017-18 Budget.  Affordable housing was a key focus with measures offering opportunities for those downsizing, investing, and for first home buyers.  Federal Treasurer Scott Morrison claims that the government’s proposed measures will raise almost $21 billion in revenue over the next four years, returning Australia’s budget to surplus by 2021.

Along with some of our approved product providers, we have prepared the following high-level summary of the key budget announcements that we believe are most relevant to our Fortress clients.

Note that each of these proposals will only become law if passed by Parliament.

 

SUPERANNUATION
Additional non-concessional cap for retiree downsizers
Date of effect: From 1 July 2018

  • Individuals aged 65 or older will be able to make non-concessional (after tax) super contributions of up to $300,000, using proceeds from the sale of the family home.

Super savings scheme for first homebuyers
Date of effect: From 1 July 2017, withdrawals from 1 July 2018

  • First home buyers will be able to save for a deposit by making voluntary concessional and non-concessional super contributions (up to a total of $30,000). The Government has provided an online estimator to help individuals calculate the potential benefit of the scheme.

 

TAX FOR INDIVIDUALS
Medicare levy increase of 0.5% from 2019
Date of effect: 1 July 2019

  • The Medicare levy will increase from 2% to 2.5% pa to fully fund the National Disability Insurance Scheme. This increase will flow to a range of other taxes such as Fringe Benefits Tax.

New thresholds for HELP debt repayments
Date of effect: 1 July 2018

  • The annual income threshold at which Higher Education Loan Program (HELP) repayments commence will be reduced to $42,000 (currently $54,869). Also, the repayment rate will start at 1% and increase progressively to 10%.

 

TAX FOR BUSINESSES
Extension of the deductibility threshold for small business
Date of effect: 1 July 2017

  • The ability for small businesses with an annual turnover of $10 million or less to claim an immediate deduction for eligible assets costing less than $20,000 each will be extended for 12 months.

 

TAX FOR INVESTORS
Incentives for investment in affordable housing
Date of effect: From 1 January 2018

  • Resident individuals who invest in qualifying affordable housing will be eligible for an increase in the capital gains tax (CGT) discount from 50% to 60%.

Restrictions on deductions for residential property investments
Date of effect: From 1 July 2017

  • Depreciation deductions for residential plant and equipment (e.g. dishwashers and ceiling fans) will be limited to investors who incur the outlay – not subsequent owners.
  • Investors will be unable to deduct travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

 

SOCIAL SECURITY
Reinstatement of Pensioner Concession Card entitlements
Date of effect: From 1 July 2017

  • Individuals who lost entitlement to the Pensioner Concession Card due to the 1 January 2017 assets test changes will be reissued with the card.

Increased pension residence requirements
Date of effect: From 1 July 2018 

  • An individual will need to have at least 15 years’ residence in Australia qualify for the age pension or disability support pension.

 

WHAT ELSE?

  • A major bank levy will be introduced for institutions with licensed entity liabilities of at least $100 billion (indexed to GDP). The levy will equate to an annualised rate of 0.06%.
  • Job seekers and parents who receive working age income support will have increased activity test requirements from 20 September 2018.
  • The maximum length of the Liquid Assets Waiting Period will increase from 13 weeks to 26 weeks from 20 September 2018.
  • A one-off Energy Assistance Payment of $75 for single recipients and $125 for couples will be paid for those who qualify on 20 June 2017.
  • Family Tax Benefit rates will not be indexed for 2 years from 1 July 2017.
  • A new upper income threshold of $350,000 pa will apply to the child care subsidy from 1 July 2018.

If you would like to understand how the budget affects you and your finances, please call us on 07 4646 4970 or use the BOOK CONSULTATION button at the top of the page.

The official Budget website can be accessed here.

 

Complied by Emma Linton Doig, Practice Officer at Fortress Financial Solutions

Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557.

This article was written with assistance from Colonial First State and MLC.

Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the issuer of super, pension and investment products. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) carefully and assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision.

The information contained in this Federal Budget Analysis is current as at 9 May 2017 and is prepared by MLC Technical, part of GWM Adviser Services Limited ABN 96 002 071749, registered office 150-153 Miller Street North Sydney NSW 2060, a member of the National Australia Bank Group of Companies. 

Any advice in this Federal Budget Analysis has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs. Any tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. 

Past performance is not a reliable indicator of future performance.

Before acquiring a financial product, you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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