It’s been a busy few weeks for us at Investment Zone; not only have we been inundated with new clients, but we have been spending some time on Federal Budget Analysis since the announcements on Tuesday 9th May. Unsurprisingly, there was little by way of social security and superannuation changes, especially given the 2016/17 Budget reforms had such major implications for retirees and pre-retirees.
There were, however, a number of surprises including a proposal to allow first-home buyers to contribute up to $30,000 into superannuation specifically for a house deposit. Treasurer Scott Morrison also confirmed tax concessions for senior Australians who sell the family home to free up equity to fund their retirement and an increase in the Medicare levy to fund the National Disability Insurance Scheme beyond 2019.
Below is our summary guide of some of the main proposals. Remember, these announcements are yet to be legislated. We will be working through the proposed changes, along with our providers, over the coming weeks to understand if and how these may affect our clients at a strategic level. Please give us a call on 1300 124 683 or email firstname.lastname@example.org if you have any questions.
First Home Buyers
First home buyers will be able to use voluntary contributions to their superannuation to save for a house deposit. Withdrawals will be taxed at a lower rate, but the amount you can contribute is capped at $15,000 a year and $30,000 all up.
Small business owners will enjoy instant tax offsets for another year. Businesses that turn over less than $10 million each year will be able to immediately write off expenditure up to $20,000.
Those over the age of 65 who downsize their home can deposit to $300,000 of the proceeds into their super fund. This is only expected to help up to 10,000 people a year.
If you lost your pensioner concession card as a result of the assets test change earlier this year, you'll now have the benefit restored.
Older Australians will get a one-off $75 power rebate.
The National Disability Insurance Scheme has been fully funded via additional money generated from the increase in the Medicare Levy.
There'll be more Commonwealth funding per student for most schools. The Federal Government will give schools an extra $18.6 billion over 10 years.
The Government has struck a deal to reduce the price of certain pharmaceuticals, meaning your out-of-pocket expenses for certain medicines will be lower. In addition, extra medicines to treat heart conditions and schizophrenia have been added to the Pharmaceutical Benefits Scheme.
Patients' out-of-pocket expenses are expected to be lower, with the Government lifting the freeze on Medicare rebates and improving the incentives for GPs to bulk bill.
The Government will invest more than $8 billion to build an inland rail network the line linking Brisbane to Melbourne, so farmers can move their goods faster and cheaper.
Residential Rental Property Owners
The Government will disallow deductions for travel expenses relating to inspecting, maintaining or collecting rent for a residential rental property. In addition, plant and equipment depreciation deductions will be limited to outlays actually incurred by investors in residential properties. Existing investments will be grandfathered.
Jobseekers who test positive to drugs will have their welfare payments quarantined.
Jobseekers aged up to 49 will now have to undertake 50 hours of approved activity a fortnight, with longer waiting periods for those with liquid assets.
Most of us will soon be paying more tax, with the Medicare Levy set to increase by 0.5% (from 2 to 2.5% of taxable income) to fund the NDIS. If passed, it will take effect on July 1, 2019.
How much extra tax will I pay per year?
What you earn: What you'll pay
$25k : $125
$50k : $250
$75k : $375
$100k : $500
$125k : $625
$150k : $750
$175k : $875
A 0.06% levy, affecting the five biggest banks (CBA, Westpac, National Australia Bank, ANZ and Macquarie) that will kick in on July 1.
From 1 July 2018, a new minimum threshold of $42,000 will be established with a 1% repayment rate and a maximum threshold of $119,882 with a 10% repayment rate.
Parents who don't vaccinate their children will lose about $28 per child per fortnight. The money will be withheld from the Family Tax Benefit Part A.
Under the new Temporary Skills Shortage visa employers will have to pay a levy of up to $5,000 for each foreign worker they employ.
Foreign property owners will now have to pay the capital gains tax when they sell it. And foreign ownership of new developments will be capped at 50 per cent.
Foreign investors are being slugged with an extra charge for properties left vacant — and there'll be an increase in their application fees.
Roll-your-own tobacco or cigar products will be taxed more, bringing them into line with the tax rates on cigarettes.
Remember, these measures are proposed only and are still subject to change. Always seek advice. Please give us a call on 1300 124 683 or email email@example.com if you have any questions.