Budget 2017 announcements
Well a more dynamic and hit the big end of town budget 2017 this year.
Some of the Keys to Budget 2017:
- Big banks a big loser paying levy to raise $6b.
- Continued Targeting of the low paying multi nationals eg Ikea to make them pay more and fair share of tax. Said to be raising $4b more.
- Help for first home owners, you can salary sacrifice (get a tax deduction for contributions) into super and then withdraw it for your first home deposit. Note when you withdraw it again for your first home deposit it becomes taxable income to reverse the previous deduction. We can see that causing some tears. But think if well understood it could be a great initiative.
- No income tax rates rates changes. But an increase in medicare levy to 2.5% from 1/7/18. Confirmation of ceasing the additional budget repair levy of 2% on taxpayers earning taxable income more than 180k on 30/6/17.
- Confirmation of phased in reduction of company tax rates to 25% within ten years. Company tax rate now 27.5% from 1/7/2017 for business with sales less than $25m.
- Extension of immediate $20k equipment write off deductions for business until 30/6/18.
- Students another loser. Increase in tertiary education fees by 7.5%. Repay Help debt (formerly and well know as hecs debt) from when income income threshold of $42000. Meaning many will repay it faster. Debt balances will now be increased annually in line with CPI.
- Although there was speculation it would finally happen, it didn’t. Not in this budget anyway. It was expected a standard work related deduction amount would be introduced of say $750. Hence simplifying individual tax return preparation has been deferred.
- Taxable payments reporting system was extended to couriers and cleaners. So like the building and construction industry who must disclose contractor payments made each year, so too do cleaners and couriers.
- Further funding for ATO to attack the cash economy and serious crime.
- Rather than waiting for gst to be paid via GST returns, GST by property purchasers will be grabbed at transaction level and at settlements. Therefore gst will be taken at the settlement statement or conveyancer process, rather than leaving it to our self assessment gst reporting system.
- No longer can you claim a tax deduction for Travel expenses related to inspecting, maintaining or collecting rent for a residential rental property and will be disallowed from 1 July 2017.
Other Budget 2017 initiatives
Improve Australians’ access to secure and affordable housing
Easing restrictions that are contributing to the supply of housing falling behind population growth and encouraging a more responsive housing market;
Improving outcomes in social housing and homelessness;
Assisting first home buyers to build a deposit inside superannuation; and
Allowing older Australians to contribute downsizing proceeds into superannuation.
Strengthening the CGT rules to reduce the risk that foreign investors avoid paying CGT in Australia;
Introducing a 50% cap on pre-approved foreign ownership in new developments;
Applying an annual charge to foreign owners who leave residential property unoccupied or not available for rent for 6 months or more each year;
NO Changes to super
Not surprising since the wave of changes last year that have been implemented and you could say Super had enough on its plate.
Changes implemented since last year include:
- balance cap of $1.6m
- non concessional contributions lifetime cap of $500k
- reduction in the concessional contribution to $25k
- extra super tax on earning above $250k of 15%
- Changes to transitional retirement
- Introduction of super contribution deduction for employees from 1/7/17
- Super contributions of proceeds up to $300,000 from downsizing a home, to encourage older Australians to boost their super retirement balances.
- First home super saver scheme
Interesting Credit card reforms
To protect consumers from poor practices in the credit card market, the Government will:
- require that affordability assessments be based on a consumer’s ability to repay the credit limit within a reasonable period;
- prohibit unsolicited offers of credit limit increases;
- simplify how interest is calculated; and
- require online options to cancel cards or to reduce credit limits.
All by July 2018
Let us know how you saw the Budget this year.
Please note not all announcements have been covered in this review of Budget 2017.
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