This year’s Federal Budget was not as controversial as previous years, however there are still changes which may affect you and your family.
Additional super contributions from proceeds of downsizing your home
From 1 July 2018, individuals aged 65 and over will be able to make an after-tax super contribution of up to $300,000 ($600,000 for couples) from the proceeds of the sale of their home, providing it was held for a minimum of 10 years. This measure will not attract any special Centrelink treatment but will allow individuals to make contributions above the super caps, without meeting work or age test requirements.
First home saver scheme
The Government will allow voluntary super contributions to be withdrawn for a first home deposit. From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year, up to $30,000 in total to super for the purposes of this measure.
Increase in Medicare Levy
From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5% of taxable income. The increase ensures the National Disability Insurance Scheme (NDIS) is fully funded.
Extending the immediate $20,000 asset write-off for small business
Accelerated depreciation rules for small businesses will extend until 30 June 2018. This allows small businesses, with aggregate annual turnover of less than $10m to immediately deduct purchases of eligible assets up until that date, provided the asset costs less than $20,000. Assets valued $20,000 or more can be depreciated at 15% in the first income year and 30% each income year thereafter.
Disallowing deduction of travel expenses for residential property
From 1 July 2017, the Government will no longer allow deductions for travel expenses related to inspecting, maintaining or collecting rent for residential rental property. However, investors can continue to deduct those types of expenses incurred by third parties such as real estate agents and property management services.
Reducing the corporate tax rate
The legislation to reduce the corporate tax rate has passed both houses but is not yet law. The reduced company tax rate will progressively apply to companies with an aggregated annual turnover of less than $50m only. The proposed rate for 2016/17 onwards is 27.5% for companies with annual aggregated turnover of less than $10m per year.
Changes to repayment of HELP debt
The income thresholds will be revised for the repayment of HELP debt, repayment rates and the indexation of repayment thresholds. 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.
Pensioner concession card reinstatement
Age pensioners who lost entitlement to their Pensioner Concession Card due to the assets test changes on 1 January 2017 will have their card reinstated. The card will be automatically reissued over time with an ongoing income and assets test exemption.
Family Tax Benefit (FTB)
The FTB payment rate will remain fixed until 1 July 2019 and indexed each year thereafter. From 1 July 2018, all families with total income over $94,316 will have their FTB Part A reduced by 30 cents for every dollar above $94,316.
In writing this article, Planning for Prosperity (ABN 97 110 670 463), has not taken into account any particular person’s objectives, financial situation or needs. Before acting on this information, consider the appropriateness of this information having regard to your financial situation or needs. We recommend seeking financial advice specific to your situation before making any financial, investment or insurance decisions.