Budget 2017-18 Fairness, security and opportunity www.accurium.com.au P 1800 203 123
Budget 2017-18 Fairness, security and opportunity Superannuation Social security Tax Aged care Small business Other measures 2
Superannuation Additional super contributions for down-sizers Persons aged 65 and over who sell their home can contribute proceeds to super from 1 July 2018: Voluntary contribution rules (work test for 65-74 year olds, no contributions for aged 75 and over) do not apply $1.6m total superannuation balance contribution rule does not apply Up to $300,000 non-concessional contribution, in addition to existing caps Only on sale of a principal place of residence held for minimum of 10 years Amounts contributed will be counted towards Age Pension Assets Test Both members of a couple can contribute proceeds from the same home No extension to the $1.6m transfer balance cap 3
Superannuation Additional super contributions for down-sizers Some things to think about: May be able to apply more than once during retirement - near start and towards end Administratively, will proceeds be checked or can any amount up to $600,000 post sale of a home be allowed? Measure may not be advantageous for those currently paying low rates of tax outside of super 4
Superannuation First home saver scheme Voluntary superannuation contributions to purchase first home: From 1 July 2017 up to $15,000 per year of voluntary contributions within the existing contribution caps, up to $30,000 in total From 1 July 2018 can withdraw contributions for a first home deposit along with associated deemed earnings Earnings deemed at 90 day bank bill rate + 3% (currently 4.78% p.a.) Withdrawals from concessional contributions will be taxed at marginal rate less a 30% offset Both members of a couple buying their first home are eligible to apply 5
Superannuation First home saver scheme Some things to think about: Can potentially save up to $60,000 for a couple buying their first home For low income earners paying low rates of tax on earnings outside super this measure may not be as effective as saving outside super What if one person in a couple is not a first home buyer? Will there be separate accounts for this measure or will amounts be invested in the member s current super accounts? What happens when actual earnings in superannuation are less than the deemed earning rate? What proof will be needed to access withdrawals? 6
Superannuation Limited recourse borrowing arrangements Limited recourse borrowing arrangements included in total superannuation balance and transfer balance account from 1 July 2017: Outstanding balance of LRBA included in total superannuation balance Repayments of principal and interest from an accumulation account is a credit in the transfer balance account Will apply to LRBA balances from 1 July 2017 7
Social security Family tax benefits and DHS improvements Family tax benefits (FTB): Freeze on current FTB payment rates until 1 July 2019 From 1 July 2018 FTB Part A Income Test taper rate for higher income families set to a consistent 30 cents per dollar above Income Free Area DHS improvements to reduce administrative red tape from 2016-17: Increase Centrelink call centre capacity Requiring welfare claimants to provide TFN when first lodging claims Allow information held by DHS to be used in potential criminal proceedings 8
Social security Energy assistance One off payment for those eligible qualifying payments on 20 June 2017 and who are resident in Australia $75 Singles, $125 couples paid automatically in week commencing 26 June 2017 Not taxable, not counted towards Age Pension Income Test Qualifying payment including but not limited to Age Pension, Disability Support pension, and Veteran s Service Pension 9
Social security Pensioner residency requirements Revised residency requirements for Age Pension and Disability Support Pension (DSP) from 1 July 2018 Exemptions apply for DSP applicants who acquired disability in Australia Must have 15 years continuous Australian residency unless have either: 10 years continuous Australian residency with 5 years during working life 10 years continuous Australian residence, without receiving an activity tested income support payment for cumulative period of 5 years 10
Social security Liquid assets and pensioner concession card From 20 September 2018 increase maximum liquid assets waiting period from 13 weeks to 26 weeks Reinstate Pensioner Concession Card from 9 October 2017 for pensioners who lost Age Pension as a result of 1 January 2017 Assets Test changes Will retain Commonwealth Seniors Health Card to continue receipt of Energy Supplement Low income health care card will be deactivated 11
Social security Working age payment reforms Consolidate 7 working age payments and allowances into a JobSeeker payment: Newstart allowance, Sickness allowance, Widow allowance, Partner allowance, Widow B pension, Wife pension, Bereavement allowance. Various transition dates for recipients of affected payments New participation framework will apply from 20 September 2018: Aligning participation requirements for recipients under age 30 to age 49 Recipients aged 55 to 59 can only meet up to half participation requirement from volunteering Recipients aged between 60 and Age Pension age have new activity requirements of 10hours a fortnight that can be met through volunteering 12
Tax Medicare levy 0.5% increase in Medicare levy from 1 July 2019 Low income thresholds for 2016-17 increased 13
Tax Residential property deductions From 1 July 2017 plant and equipment depreciation deductions limited to actual outlay incurred New plant and equipment purchased after 9 May 2017 are claimable only by the investor who purchases them over the life of the asset Existing investments as of 9 May 2017 are grandfathered and deductions can continue until investor no longer owns asset or asset reaches end of its life From 1 July 2017 deductions no longer allowed for travel related expenses to inspect, maintain or collect rent for residential rental property 14
Aged care Strengthening aged care From 2018-19 funding will be extended to Commonwealth Home Support Program and Regional Assessment Services From 1 July 2017 Government will establish and support industry-led aged care workforce taskforce From 2017-18 Government will provide option of palliative care at home rather than in a hospital 15
Small business Growing small business Immediate deductibility threshold extended until 30 June 2018: Aggregate annual turnover less than $10 million can immediately deduct purchases of eligible assets provided the asset costs less than $20,000 From 1 July 2018 threshold will revert back to $1,000 Improving CGT concessions from 1 July 2017: CGT concession rules modified to ensure only accessed in relation to assets used in a small business Will not change the aggregate turnover threshold of $2 million or maximum net asset value test threshold of $6 million 16
Other measures Foreign investment Increase the CGT withholding rate to 12.5% and reduce the CGT withholding threshold to $750,000 from 1 July 2017 Number of other changes affecting property investment by foreign residents from 9 May 2017: Introduce a charge on residential property left vacant for at least 6 months per year Deny access to the CGT main residence exemption however existing properties will be grandfathered until 30 June 2019 Introduce a 50% cap on foreign ownership in new developments 17
Other measures Bank levy Introduce levy for banks with licensed entity liabilities of at least $100 billion (five largest banks) from 1 July 2017 Excludes superannuation funds and insurance companies Levy calculated as 0.06% of liabilities Levy will not apply to deposits protected by the Financial Claims Scheme 18
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The information in this presentation has been prepared by Accurium Pty Limited ABN 13 009 492 219 (Accurium). It is general information only and is not intended to be financial product advice or legal advice and should not be relied upon as such. It is a guide only and based on Accurium s understanding of the 2016-17 Federal Budget Report and current taxation laws and the continuance of those laws and their interpretation. In preparing this information, Accurium has relied on publicly available information and sources believed to be reliable. However, the information has not been independently verified. Whilst all care is taken in the preparation of this presentation, no warranty is given with respect to the information provided. Neither Accurium nor their related entities, nor any of their directors, employees or agents accept any liability for any loss or damage arising out of the use of all or part or, or any omission, inadequacy or inaccuracy in, the information presented. Scenarios, examples and comparisons are shown for illustrative purposes only and should not be relied on by individuals when they make investment decisions. We recommend that individuals seek professional advice before making any financial decisions. Date 11/05/2017. www.accurium.com.au P 1800 203 123