2017-18 Federal Budget - What does it mean for you? 2017-18 Federal Budget - What does it mean for you?Hello , The Federal Treasurer Scott Morrison has released his second budget. Detailed below is a brief round up of the Governments proposals. As with previous Federal budgets the proposals are required to be approved by parliament prior to becoming law and therefore may be subject to change. If you are concerned or have questions about how these proposed changes may affect you please contact us. Budget Snapshot Here is a summary of the key points relating to Superannuation, Taxation and Social Security: Superannuation 1.Ability to contribute the proceeds of downsizing your home to superannuation for those aged 65 and over from 1 July 2018 up to $300,000 per person. 2. First Home Buyers Super Saver Scheme - Ability for individuals to contribute $15,000 p.a. and $30,000 in total to superannuation ($60,000 for a couple) to assist with saving a deposit to purchase a first home faster from 1 July 2017. 3.SMSF Limited Recourse Borrowing Arrangements included in the total super balance (TSB) from 1 July 2017. Taxation 1.Marginal tax rates unchanged for 2017-18. 2.Increase in Medicare Levy from 1 July 2019 to 2.5%. 3.Disallowance of deduction for travel expenses for Residential investment property from 1 July 2017. 4. Limitation on deductable depreciation for Residential investment property on a prospective basis. 5.Instant Tax Write-Off extension for Small Businesses to 30 June 2018 for eligible costs under $20,000. Social Security 1.Pensioner concession card to be reinstated for those who lost theirs as a direct result of the 1 January 2017 Centrelink asset test changes. 2. One-off Energy Assistance Payment for qualifying income support payments of $75 for singles and $125 for couples - 20 June 2017. 3.Enhanced Residency requirements for Pensioners from 1 July 2018.
Budget in More Detail Superannuation 1.Contributing the proceeds of downsizing your home to superannuation From 1 July 2018 people aged 65 and over will be able to make non-concessional contributions to their super of up to $300,000 per person and therefore $600,000 in total for couples from the proceeds of selling their home where: 1. the home is the principal place of residence; and 2. has been held for a minimum of 10 years. These contributions can be able to be made: 1. Irrespective of work status (i.e. no “work test” to be met to be able to contribute); 2. Are in addition to any other concessional or non-concessional super contributions individuals are eligible to make; and 3. Are not subject to the total super balance limit test of $1.6 million – i.e. individuals will be able to contribute to superannuation despite already having $1.6 million in super. However, they will not be able to transfer more than $1.6 million to the “pension phase” of super. 2.First home buyers Super Saver Scheme From 1 July 2017 individuals can make voluntary contributions to super of up to $15,000 p.a. and $30,000 in total ($60,000 per couple) to super to assist with saving to purchase a first home with the following points noted: 1.These contributions must be made within existing superannuation contribution limits; 2.Withdrawals of contributed amounts along with deemed earnings will be allowed from 1 July 2018; 3.Earnings on these funds will be calculated using a deemed rate of return based on the 90 day bank bill rate + 3%; 4.Withdrawals of concessional super contributions and associated earnings will be taxed at the individuals marginal tax rates less a 30% tax offset. 3.SMSF Limited recourse borrowing arrangements (LRBA) From 1 July 2017 the outstanding balance of a LRBA is proposed to be included in the calculation of a members total super balance (TSB). This may impact a members ability to make non-concessional contirbutions to super where their TSB exceeds $1.6 million or utilise the “concessional contribution catch-up” provisions from 1 July 2018 where their TSB exceeds $500,000.
Taxation 1.Marginal Tax rates remain unchanged There will be no change in the marginal tax rates for individuals for the 2017-18 tax year. The Temporary Budget Repair Levy will expire on 30 June 2017. 2.Increase in Medicare Levy From 1 July 2019 the medicare levy will increase from 2% to 2.5% to assist with funding the National Disability Support Scheme (NDIS). 3.Disallowance of deduction for travel expenses for Residential investment property From 1 July 2017 travel costs relating to inspecting, maintaining or collecting rent on residential properties will not be tax deductable. Deductions will still continue for fees paid to real estate agents or other property managers for these services. 4. Limitation on deductable depreciation for Residential investment property On a prospective basis as at 9 May 2017, depreciation deductions for plant and equipment in residential investment property will be limited to the actual expenditure incurred by the investor. This is an integrity measure designed to ensure that successive purchasers of a property cannot depreciate as asset beyond the actual cost. 5.Instant Tax Write-Off extension Businesses with an annual aggregated turnover of less than $10 million will continue to be able to deduct purchases of eligible assets costing less than $20,000 where first used or installed ready for use by 30 June 2018 being an extension of 1 year.
Social Security 1.Pensioner Concession Cards (PCC) are to be reinstated The Government will reinstate the PCC for those who lost their pension payments as a direct result of the 1 January 2017 Centrelink asset test changes. 2.One-Off Energy Assistance Payment Individuals receiving a qualifying income support payment, e.g. Age Pension, Disability Support Pension etc, at 20 June 2017 and who are resident in Australia will receive a one-off payment of $75 for single recipients and $125 per couple. 3.Enhanced Residency requirements for Pensioners From 1 July 2018 claimants for the Age and Disability Support Pensions will be required to meet one of the following: 1.15 years of continuous Australian residence; or 2.10 years continuous Australian residence, with 5 of these years being during their working life (age 15to 65); or 3.10 years continuous Australian residence, without having received an activity tested income support payment (e.g. Newstart) for a cumulative period of 5 years. The current rule is 10 years of total residency with one period of at least 5 years continuous residency.
Like to know more? If you would like to find out more about how the Budget could affect you please contact us or go to www.budget.gov.au. Note: Any advice contained in this document is general in nature and does not consider your particular situation. Please do not act on this advice until its appropriateness has been determined by a qualified financial adviser. Whilst the tax implications have been considered we are not, nor do we purport to be a registered tax agent. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding. Know Someone Who Could Benefit from Our Advice? We really enjoy working with you and look to work with others like you to help them reach their financial goals and make their financial life simpler. Your family, children, friends or colleagues may value our services just as you do! For that reason, we look to invite our clients to refer others to us. When you refer people to us, we introduce them to our practice in a non-obtrusive way. Our initial meeting is complimentary with the aim of discussing their financial goals, aspirations, challenges and how we can add value to them. Best Wishes, Chris Whiteford, Adv Dip Fs (FP), CA, BEc (Accounting) Principal | Aurora Financial Planning Authorised Representative of Charter Financial Planning Limited ABN 35 002 976 294 AFSL 23665 Note: Any advice contained in this document is general in nature and does not consider your particular situation. Please do not act on this advice until its appropriateness has been determined by a qualified financial adviser. Whilst the tax implications have been considered we are not, nor do we purport to be a registered tax agent. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding. ContactP: (02) 6685 8867 M: 0434 210 153 2/10 Brigantine Street, Byron Bay NSW 2481 Lvl 1, 95 Tamar Street, Ballina NSW 2478
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