According to Federal Treasurer Scott Morrison, the 2017 Budget is based on the principles of ‘fairness, security and opportunity’. After the massive changes to super which are due to kick in from 01 July, most of the proposals in this year’s budget are relatively modest. Here are some of the measures which may affect you.
- First home buyers
From 01 July 2017, first home buyers will be able to use their super as a savings vehicle. People will be able to make extra voluntary super contributions up to $15,000 per year to a maximum of $30,000. As this is only taxed at 15%, this can be a tax effective way to save for a deposit for your first home. At the other end, the government is also proposing to make it easier for the over 65s to downsize their home while also boosting their super. The proposal will allow people who sell their home to deposit up to $300,000 into their super and have this treated as a non-concessional contribution outside their existing concessional and non-concessional caps.
- Tax changes
People with outstanding Higher Education Loan Program (HELP) debts will find they have to start paying more back sooner. The Budget Repair Levy will be scrapped for those earning more than $180,000. However, the Medicare levy will increase from 2 to 2.5% from July 2019 to help fund Medicare and the NDIS. There’s also good news for property investors who invest in qualifying affordable housing as they will be eligible for an increase in the capital gains tax discount from 50 to 60%.
- Social security
There’s good news for pensioners who lost their Pensioner Concession Card entitlements due to asset test changes as they will now have their card reinstated. Affected pensioners will have access to a wider range of concessions than those available with the Health Care Card. On the other hand, there will be stricter residence requirements for both the age and disability support pensions from July next year.
Please remember that although the Federal Budget generates a media frenzy, most of the major changes announced are only proposed changes. They will not come into effect until passed by both Houses of Parliament and receive the Governor General’s Assent.
No doubt there will be much debate and media attention placed on these proposed changes, but until we advise you that the changes have become law and how they may affect your financial situation, we all just have to wait and see.
Stay tuned and feel free to get in touch if you would like to know how the budget will affect your personal situation…
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