THE 2017 BUDGET OVER BREAKFAST with Damian Knoblanche

Transcription

1 THE 2017 BUDGET OVER BREAKFAST with Damian Knoblanche

2 DISCLAIMER. The information in this presentation is general commentary only and should not be considered to be advice. It has been prepared without considering your objectives, financial situation or needs. You should not act solely on the basis of the material or comments in this presentation and you should consider the appropriateness of any advice before acting on it. Also changes in legislation may occur quickly. Therefore, we recommend that our formal advice be sought before acting in any of the areas. This presentation is issued and/or presented as a general guide for clients and others. Peak Partnership Pty Ltd. ABN

3 THE BIG PICTURE. FAIRNESS OPPORTUNITY SECURITY

4 THE DEFICIT $ Billion Source: Underlying Cash Balance 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

5 THE DEFICIT. THE HEADLINES. $29.4 billion Deficit this Budget Down from $37.6 billion Deficit last year Expected return to Surplus now to +$7.4 billion Last Surplus was under Wayne Swan GDP increases to 3.0% for (up from 2.75%) Unemployment down from 5.75% to 5.25%

6 WINNERS & LOSERS. BIG BANKS SME BUSINESS TAXPAYERS NDIS SUPER INVESTORS FIRST HOME BUYERS FOREIGN HOME OWNERS INFRA- STRUCTURE UNI STUDENTS SCHOOL STUDENTS

7 IT S BUSINESS.

8 IT S BUSINESS. HOW IS THE 10 YEAR ENTERPRISE TAX PLAN TRACKING? BIG BUSINESS With $10 million+ annual turnover SBE TODAY Companies with less than $10 million annual turnover FROM JULY 2017 Companies with less than $25 million annual turnover BY 1 JULY 2026 Businesses with less than $50 million annual turnover Source: Reducing the Corporate Tax Rate

9 IT S BUSINESS. IF YOUR BUSINESS EMPLOYS FOREIGN WORKERS A Foreign Worker Levy will be introduced (replaces 457 Visa) to fund up to 300,000 apprenticeships/traineeships over 4 years. The fees are: TURNOVER Permanent Work Visa Temp. Skills Shortage Visa < $10 million $3,000 up-front $1,200 up-front > $10 million $5,000 up-front $1,800 up-front

10 IT S BUSINESS. BANK BASHING IS BACK! Banks to pay a new tax of $6.2b over 4 years, from 1 July 2017 Deposit-taking banks with licensed entity liabilities of $100b + Big Four + One will pay $300 - $400 million annually (0.6%) Measure designed to help with Budget repair Fines between $50 - $200 million for banking sector misconduct, with senior bank executives to be registered

11 INFRASTRUCTURE PROJECTS. PLANES, TRAINS, AUTOMOBILES (AND A BIT OF HYDRO ELECTRICITY). $10b National Rail Program (Brisbane s Cross-River Rail?) $5.3b equity in Western Sydney Airport (completed 2026) $472m Regional Growth Fund (help regions adapt to change) $100m Advanced Manufacturing Fund (inc. Vic & SA auto industry) $8.4b for Melbourne-Brisbane Inland Rail (work starts )

12 INFRASTRUCTURE PROJECTS. ACKNOWLEDGING REGIONAL QUEENSLAND AND RURAL AUSTRALIA $844m Bruce Highway upgrade $6m Mt Lindsay Highway upgrade $2b Farm Business Concessional Loan Scheme $1b ongoing Landcare funding over 5 years

13 BUSINESS WATCHDOG. Multinational Anti-Avoidance Law: extending to corporate structures involving foreign partnerships and foreign trusts. Crack-down expects to raise total $4b this FY Black Economy: Building & Construction Taxable Payments Reporting to include courier and cleaning industries from 1 July 2018 Black Economy: Banning technology that falsifies sales records to avoid paying tax. Red Tape: $300m to States and Territories to remove unnecessary regulatory restrictions

14 $20,000 ASSET WRITE-OFF. BUDGET BONUS: Extended to 30 June 2018 SME have 416 days to take advantage SME with turnover up to $10 million* 90,000 more businesses can access scheme Depreciable assets: installed/ready for use NOT a tax refund *Subject to legislation being passed

15 YOU, THE TAXPAYER.

16 YOU, THE TAXPAYER. No changes to current income tax rates Budget Repair Levy of 2.0% on incomes > $180,000 ends 30 June Medicare Levy to 2.5% from 1 July 2019 on incomes > $21,655 Medicare Levy increase to help fund NDIS, raising $8.2b over 4 years Medicare Guarantee Fund: ongoing funding of Medicare Benefits Schedule and Pharmaceutical Benefits Scheme Zombie tax measures abolished (from prior Budgets)

17 YOU, THE TAXPAYER INCOME BANDS TAX RATE $0 - $18, % $18,201 - $37, % $37,001 - $87, % $87,001 - $180, % $180,001 and over 45.0%* *Budget Deficit Repair Levy of 2.0% ends 30/06/2017

18 YOU, THE TAXPAYER. Government will invest $37.3b on childcare to help ease cost of living pressures for approx. one million Australian families Depending on family structure and household income, childcare rebates could increase by thousands of dollars Crackdown on unemployment welfare recipients, including alcohol and drug testing for 5,000 new recipients and penalties for not actively seeking work reduced or cancelled welfare payments

19 Housing affordability. First Home Buyers can salary sacrifice $15,000/year into superannuation, to a maximum of $30,000 to save for a home deposit (from July 2017). Voluntary contributions at 15% and withdrawals attract 30% rebate. Both members of a couple can take advantage of the scheme, effectively $60,000 at a lower rates.

20 HOUSING AFFORDABILITY & ACCESSIBILITY. There is no silver bullet to the housing affordability crisis. Foreign ownership in new property developments restricted to 50% Foreign owners of property that is unoccupied for 6 months in a year will be taxed Foreign residents not eligible for Capital Gains Tax Main Residence Exemption CGT withholding rate will be 12.5% (up from 10%) and the threshold will be reduced to $750,000 (from $2 million)

21 A HECS ON Students. University funding cut by $2.8b, via a 2.5% efficiency dividend on commonwealth grant scheme payments in 2018 and 2019 University students to pay up to 7.5% more in fees, starting at 1.8% a year in 2018 and totalling a 7.5% increase by 2021 The threshold for repaying student loans will be reduced from $55,000 to $42,000 from July 2018, indexed to CPI (not AWE) Overall $2.2b increase in school funding over the next 4 years, but at least 24 private schools will have funding cut

22 THAT S JUST SUPER.

23 THAT S JUST SUPER. Some major changes to superannuation (announced previously) from 1 July 2017, but worth recapping: Contributions limits going down High income earners threshold lowered Transition to Retirement (TTR) tax exemptions Retirement Phase Transfer Cap of $1.6 million

24 THAT S JUST SUPER. CONCESSIONAL CONTRIBUTIONS CAPS Pre-July Under 49 years $30, and older $35,000 Post-July $25,000

25 THAT S JUST SUPER. NON-CONCESSIONAL CONTRIBUTIONS CAPS Pre-July Post-July 65 and older $180,000 $100,000 Under 65 years $540,000 $300,000 Subject to $1.6 million Cap

26 THAT S JUST SUPER. HIGH INCOME EARNERS & CONTRIBUTIONS TAX Pre-July Post-July $250,000 + pa 15% 30% $300,000 + pa 30% 30%

27 THAT S JUST SUPER. TRANSITION TO RETIREMENT TAX EXEMPTIONS Must be of preservation age to access TTR - depending on your date of birth, that could be between 55 and 60 years old No limit on how much you can transfer into TTR pension phase, but you need to withdraw between 4%-10% as a pension payment From 1 July, income generated by assets supporting a Pension Account will attract 15% tax - and you won't be able to treat certain income stream payments as lump sums for tax purposes

28 THAT S JUST SUPER. RETIREMENT PHASE TRANSFER CAP From 1 July 2017, there will be a $1.6 million cap on the total amount of super that can be transferred into a tax-free retirement account. The cap will apply to current retirees (ie retrospectively) and those yet to enter retirement phase with their super.

29 RETIRED LIFE.

30 RETIRED LIFE. Pensioners will get a one-off payment of $75 (for singles and single parents) and $125 for pensioner couples, to be paid by 30 June to compensate them for power price rises Pensioner Concession Card will be reinstated for those who lost it under Asset Rebalancing on 01/01/2017 no pension, but you get the card back Home Support Service has been extended: helping to keep people living independently in their own home

31 RETIRED LIFE. THE DRIVE TO DOWNSIZE: People over the age of 65 who downsize their home can contribute up to $300,000 of proceeds into super as NCC Property must have been held for 10 years or longer and the incentive is on a per person basis ie. couples = $600,000 maximum contribution to super (not subject to $1.6m Cap) Scheme starts 1 July 2018 and is expected to help up to 10,000 people each year

32 ADVICE & STRATEGY.

33 TAX STRATEGY BASICS. Timing and advice are key as usual! Historically, $2 million SME turnover has been the threshold to watch, but has shifted to $10 million Delay income to after 30 June 2017 Bring deductible expenses forward to before 30 June 2017 Hold off on disposing assets until 1 July or later

34 TAX STRATEGY FOR BUSINESS. Immediate write-off of assets costing less than $20,000 extended by another year and expected to go to $10 million turnover Expenses before 30 June 2017: stationery, office supplies, vehicle expenses, repairs & maintenance, consumables, donations, superannuation etc Pay Cents per KM allowance to staff... maximum $3,300 Secure your loans to the business with an agreement/charge Check Payroll Tax, WorkCover & Wages OSR audits

35 TAX STRATEGY FOR BUSINESS. Write off bad debts and document your actions Scrap obsolete plant Trust Distribution Minutes before 30 June 2017 Raise entity management fees Vary down PAYG Instalments Pay June quarter Employee Super Guarantee before 30 June 2017

36 TAX STRATEGY FOR INDIVIDUALS. High Income Earners $180,000+: Delay any spike in income to counter the last of the Budget Repair Levy of 2.0% Salary sacrifice into superannuation Ownership of investments: consider allocating to a spouse or Family Trust Property depreciation report Realise losses: eg. non-performing investments to offset gains Income protection insurance: convert to annual and pre-pay for deduction and discount (Cover is 24/7 unlike WorkCover and equal to 75% of salary)

37 TAX STRATEGY FOR INDIVIDUALS. Review your life insurance: ownership through super can achieve a tax deduction on the cost Update your wills and enduring power of attorney, even for adult kids Consider prepayment of interest on investment borrowings (capital guaranteed share portfolios are available) NOT in trusts Work-related expenses: uniforms, tools of trade, training courses and trade association fees Maintain a motor vehicle log book for maximum travel deductions (or even better, download our free mobile app)

38 SUPERANNUATION STRATEGY. Pay super before 30/06/2017 personal super and employee super guarantee Note: 30/06/2017 is a Friday so pay the week prior to be safe Maximise your super concessional contributions before 30 June, but don t exceed the limits ($30,000 or $35,000) it s your last opportunity at these limits Non-concessional super contributions speak with us to review the rules before contributing more funds Review your TTRP arrangements

39 SUPERANNUATION STRATEGY. Watch contribution caps: they include insurance paid where policy owner is the SMSF Consider a self-managed super fund (SMSF) and a property investment Get Franking Credits refunded to your SMSF bank account Pension Mode: make sure you draw you minimum pension for the 2016/17 year: AGE TODAY Under % % % % % % 95 and older 14.00%

40 SUPER TAX STRUCTURES.

41 CONTRIBUTIONS PHASE INVESTMENT EARNINGS PENSIONS/LUMP SUMS 2016/ /18 15% 0% 15% 0% Concessional Contributions 2016/ /18 ACC Reserves TTR ABP MLP TTR ACC Reserves ABP MLP ($1.6M) $30-$35K $25,000 Non-Concessional Contributions 2016/ /18 SMSF Pension 4%-14% 2016/17 Onwards Under 60 Over 60 Taxable % less offset* 0% tax $180K (bring fwd to $540K) $100K bring fwd taper to $300K ($1.6M) *Lump sum commutation opportunity 2016/17 only.

42 Cost Base Reset Commutation Rollback Death Benefits Estate Planning $1.6M Asset Cap Defined Benefit Pension Interplay Maximise & Equalise Cap Space/Tax-Free % Non-Concessionals Eligibility

43 ADVICE. CLARITY. DIRECTION. That s how we help your business prosper! Strategic Business Review Profit Improvement Advice Business KPI Setting Virtual CFO Board of Advice Cash Flow Budgeting & Forecasting Business Succession Planning Computer System Review & Cloud Integration

44 ESTATE PLANNING. Do you have a Will? Is it up-to-date? Has your life situation changed? Who knows what to do if you re gone? Is your family protected? Will your family suffer?

45 GO MOBILE.

46 OUR FREE MOBILE APP. 11 Calculators Latest Tax Tables GPS Logbook Mileage Tracker Receipt Manager Income Tracker Up-to-Date Financial Information