Federal Budget 2017 – What you need to know!

The Federal Budget 2017; where the nations leaders (aka bunch of helicopter loving suits) sit in a room and gasp (or ‘hear hear’) at the impact of proposed budget changes.
Tax
by
Andrew Van De Beek
May 10, 2017

The Federal Budget 2017; where the nations leaders (aka bunch of helicopter loving suits) sit in a room and gasp (or ‘hear hear’) at the impact of proposed budget changes.     This time last year, a lot of budget changes were announced, some proposing to make some very heavy impacts! However, it can feel as though very few actually get passed through parliament. So, a word to those reading – take it with a grain of salt. Take the time to chat with someone who can walk you through how it might impact you.     This year the budget seems to somewhat of a #snoozefest, with not all that much to write about at the moment. With that being said, here is team illumin8′s key takeaways from the 2017 Budget.

First Home Owner Savings   

The ‘First Home Super Saver Scheme’ will allow young people to save for their first home approximately 30% faster. The new rules will allow people saving for their first home to salary sacrifice their income into their super funds to accelerate their savings at lower tax rates. This all sounds great, but how many will be willing to take this up after the constantly changing rules surrounding the First Home Saver Account of yesteryear? 

$20k Write-off

The $20,000 immediate deduction for small business asset purchases has been extended for another year. For example, if a business buys a new asset for $20,000, they can still get roughly $5,500 back on their tax return that year instead of split over the next ~7 years. But as we always say, just because it’s tax deductible doesn’t mean you should buy it!

$300,000 Sale of main residence

Property developers may have access to a greater range of large properties as baby boomers are encouraged to downsize the family home. Home owners aged over 65 who have lived in their principal place of residence for 10 years or more, can contribute up to $300,000 of the sale proceeds directly into their Superannuation Funds as a non-concessional contribution. Could this also add another layer of buyers at the first home buyer entry level?     

HECS threshold

Announcement: Chicken Nugget sales drop dramatically as workers with accumulated HECS debt are forced to commence repayment earlier. The HECS threshold will drop dramatically (2018-19 year) from $55,874 to the now $42,000 required to start repaying, impacting pubs, clubs and smashed avocado lovers near you. In other news, 2 minute noodle sales predicted to soar! This will make it tougher for those on lower salaries forced to repay their debts, but perhaps it will also teach them to budget more? 

Medicare Levy Increase

Most taxpayers will soon be paying more tax with the Medicare Levy set to increase by 0.50% (from 2% to 2.5% of taxable income). Although this may seem like a bad thing, the increase will be used to help fund the National Disability Insurance Scheme (NDIS), which is on track to be fully rolled out from 2020. The NDIS gives all Australians peace of mind that if their child or loved one is born with, or acquires, a permanent and significant disability, they will get the support they need. The Treasurer says ‘all Australians have a role to play in supporting the disability scheme, even if they aren’t directly affected.’     

So who is the real winner of #Budget2017?  

 #SCOMO trending on twitter. It’s the best thing since Kevin07.

Victorian Budget Snapshot

With the Vic Budget also released recently, here’s what you need to know: 

- Good news for the building and construction industry with investments in Victorian infrastructure to increase to $9.6 billion per year for the next four years.

 - Stamp Duty abolished for first time home buyers valued up to $600,000.

 - First Home Owners Grant to increase up to $20,000 in Regional Victoria. 

 - Stamp Duty exemption for transferring property between spouses has been abolished. This will only apply to investment properties. Principal place of residence transfers will remain exempt as will any transfers resulting from a relationship breakdown.  

- Payroll tax cuts for Regional Victorian businesses, with the tax free threshold set to increase to $625,000 on 1 July 2017 and increase further to $650,000 on 1 July 2018.     

So, What Now?   

Want to know if any of the above changes will impact you specifically? Let’s catch-up and organise a Tax Planning meeting to plan in detail what you need to do prior to 30 June to ensure you’re paying less tax. 

Get in touch with the illumin8 team if you’ve like to chat further!  

Andrew Van De Beek

Whisky connoisseur. Utah Jazz fanatic. Father of 2. Chief of passion