Published on May 10, 2017 5:33 am, by Jen Bakker
Scott Morrison introduced the federal budget last night telling us it’s about fairness, opportunity and security. But what does that mean to your bottom line? We’ve broken it down a little and share the key points that may impact you now or in the future.
More tax – Medicare Levy
The one to affect all of us who earn above the income threshold is the increase in the Medicare Levy by 0.5% which starts on July 1, 2019.
The income level people will start paying the levy has increased to:
The revenue created by this is going to fund the gap in the National Disability Income Scheme.
Less tax – High-Income Earners
The budget repair levy of 2% will lapse from July. This was introduced from 1 July 2014 and was an additional 2% tax for individuals earning above $180,000, applied to each dollar over $180,000.
Housing – First Home buyers
If you are a first home buyer you will be able to salary sacrifice up to an additional $15,000 per year into your superannuation account. These savings will have the same tax benefits as superannuation.
The maximum amount that each first home buyer can save and access from the superannuation environment is $30,000. If you’re saving to buy with your partner, you can each do this, and save $60,000.
Housing – Downsizing over age 65
If you’re over 65 and you downsize your home, you can put up to $300,000 into your superannuation fund. If there are two of you, this will give you up to $600,000 you can have in the superannuation environment.
University students face a 7.5% tuition fee increase, starting in 2018. After graduation repayment of your HECS debt will start when you’re earning $42,000 (down from $51,957).
Not much here really. The government is paying a one-off winter energy payment for the 2016/2017 year of $75 for singles and $125 for couples at a cost of $268.9 million.
If you lost your pensioner concession card when the assets test changed earlier this year, you will get it back.
There will be additional funding in-home support services to the elderly, however, the residency requirements to access the pension are toughening up.
The current instant asset tax write-off of $20,000 that applies to small business owners has been extended for another if you have an annual turnover of up to $10 million.
This measure allows a small business to claim an immediate deduction on the cost of each depreciating asset that they purchase for less than $20,000. This was introduced in May 2015 with an end date of June 2017. The government proposes to extend this by another year.
Businesses who employees Foreign Workers
Small business will need to make a one-off payment of $3,00 and then $1,200 per year per worker. Larger businesses will need to pay $5,000 as a one-off payment and then $1,800 per year.
This levy is being introduced to raise funds towards a new Skilled Australians Fund.
Social security recipients
The government is taking measures to save $632 million over five years by toughening the rules on Centrelink recipients.
If you don’t show up to an appointment or work-for-the-dole activity it may result in reduced or cancelled payments. There will also be a removal of backdating provisions for those who miss appointments or fail to update their details. Previously some payments have been made retrospectively after being approved, this will no longer be the case.
New drug testing trials are being implemented with the view that drug addicts and alcoholics will be ineligible for disability pensions. Social security payments to those who test positive will be placed on a cashless debit card which can only be used to pay for certain living expenses.
Finally, single parents will be subject to closer scrutiny to verify their relationship status, with the intention of cracking down on single parents who fraudulently collect additional payments.
Children who aren’t vaccinated
Expected to start in July 2018 you will be $14 per week worse off, with $28 per payment wiped from your family tax benefits each fortnight.
Expect some changes to tax concessions, including no longer being able to claim a tax deduction for trips to your investment properties and some changes to what can be depreciated.
The capital gains tax exemptions are to be removed. Properties that are owned by foreign investors and vacant for more than 6 months each year will be subject to an annual $5,000 or more per year tax.
Additionally, developers will only be able to sell 50% of new developments to foreigners.
Banking customers to be impacted?
Watch your interest rates!
The top 4 banks plus Macquarie are to be hit with a levy on liabilities from July 1 which is expected to raise $6.2billion for the government over four years.
The treasurer suggests this won’t affect us, the customer, as we can just move our business to one of the banks that aren’t impacted. It’s quite a good exercise to try and figure out which of the “smaller” banks aren’t owned by one of the top 4!! Watch this space.
The tax treatment for roll your own cigarettes will change to be in line with pre-made cigarettes.
You can expect the price of your rollies to increase as the government expects to make an extra $360 million in tax revenue from you over the next four years!
Former Parliamentarians will lose their travel entitlements saving $2.6 million over the next 5 years. Former Prime Ministers will retain the entitlements.
Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.