The Government played a pretty straight bat with this year’s Federal Budget, sticking closely to its pre-Budget announcement themes of infrastructure and housing affordability. On the whole, the proposed changes were expected and mostly welcome in a Budget that Treasurer Scott Morrison described as being about making the “right choices” and being “fair and responsible”.
A summary of the key points from the Budget that may affect your financial situation is provided below. Please remember that these are proposals only and are subject to the passing of legislation, so should be discussed with your financial planner.
- the Pensioner Concession Card will be returned to those people who lost it following the 1 January 2017 changes to the assets test
- those over 65 years of age are able to contribute up to $300,000 to super from the sale of the family home
- tax deductions for travel expenses relating to rental properties ceased
- the Temporary Budget Repair Levy will cease from 1 July 2017
- First Home Super Saver Scheme of up to $30,000 for first home buyers.
Contribute the proceeds of downsizing to super
From 1 July 2018, if you are over age 65 and sell your family home, you may have the opportunity to make a one-off contribution of up to $300,000 to your super. You will not be required to meet the work test and the normal after-tax contribution limit will not apply. To qualify, you must have lived in the home as your main residence for at least ten years. If your home is owned jointly as a couple, each of you will be able to contribute up to $300,000 to your super.
Medicare Levy Rate increases
From 1 July 2019, the Government will increase the Medicare Levy by half a per cent from 2.0 to 2.5 per cent. This is to ensure the National Disability Insurance Scheme is fully funded and to future-guarantee the Medicare system.
Low-income earners will continue to receive relief from the Medicare Levy through the low-income thresholds for singles, families, seniors and pensioners. The current exemptions from the Medicare Levy will also remain in place.
Temporary Budget Repair Levy ceases
If you are a high income earner, the Budget Repair Levy has not been extended and ceases from 1 July 2017.
Disallow the deduction for residential rental property travel expenses
From 1 July 2017, if you have a residential rental property, you will no longer be able to claim tax deductions for travel expenses related to inspecting, maintaining or collecting rent. Additionally, the rules around claiming depreciation will change so that deductions for plant and equipment will only be allowed where an expense has actually been incurred by you.
This change will not prevent you from engaging third parties such as real estate agents for property management services. These expenses will remain deductible.
If you have any questions relating to this and how it effects you, please contact me on 49725177 for an obligation free meeting.
This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. Infocus Securities Australia Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances.