As you know, the Australian Government released the 2017-18 Federal Budget earlier this month. The big question is, what does this mean for you? We have summarised the budget into some of the key points that you should be taking away.
Bear in mind, any changes proposed in the Federal Budget need to be passed by the House of Representatives and the Senate. In other words, not all of the proposals in the Federal Budget will necessarily become law.
The big winners in this year’s Federal Budget include those saving for their first home, people looking to downsize, and small business.
First home buyers can take advantage of the First Home Super Savers Scheme, which will provide them a tax efficient alternative to saving a deposit for their first home as of 1 July 2017. First home buyers can make voluntary super contributions of up to $15,000 a year and no more than $30,000 in total. These voluntary contributions will be taxed at 15% (instead of their marginal tax rate), and can be withdrawn to use towards their deposit for purchasing their first home. This is the first of its kind in Australia and will hopefully get more people into their own homes.
From 1 July 2018, people who are aged 65 and over will be able to make a non-concessional contribution (contribution from money after tax) into their superannuation of up to $300,000 from the proceeds of selling their home. This allows seniors the ability to downsize their home and move into a more suitably sized property for retirement, whilst freeing up the larger housing stock for younger families. These new contributions will be in addition to the existing contribution rules and concessional and non-concessional caps.
Small business owners are looking to gain from this year’s budget with the immediate write off of up to $20,000 for eligible assets extended for another year.
Not everyone has walked away as a winner from the 2017 Federal budget as some groups that haven’t been targeted in recent years have found themselves affected. Big banks and foreign property investors were the worst hit.
Australia’s five biggest banks will be facing a new levy that will be set at 0.06% of their liabilities. This new levy is aiming to raise $6.2 billion over the next four years to assist with budget repair and bring the overall budget into surplus.
Foreign investors will also feel the sting of the new budget, including those who have empty investment properties. Any foreign owned property that is vacant for more than six months each year will now pay an annual vacancy charge of $5000. Further to this, foreign property owners will no longer receive a Capital Gains Tax (CGT) exemption on their principle place of residence; instead a new CGT rate of 12.5% will apply.
If you would like to know more about how the 2017 Federal Budget may affect your personal situation, give us a call today.