Following on from Darren’s video on the 2017 Budget Wrap-Up Key Points, we have provided a summary below with more information on each of the points Darren spoke about.
Note: These changes are proposals only and may or may not be made law
Superannuation
Contributions from downsizing the home
Date of effect: 1 July 2018
Individuals aged 65 or older will be able to make non-concessional (after tax) super contributions of up to $300,000, using proceeds from the sale of the family home. This limit will:
- apply on a per person basis
- be in addition to the ordinary non-concessional contribution cap, and
- be available where the home has been owned for at least 10 years.
Unlike other non-concessional contributions, it will not be necessary to meet a work test or have a ‘total super balance’ under $1.6 million. The amount contributed will not be exempt from the assets test used to assess eligibility for the Age Pension.
First home super saver scheme
Date of effect: From 1 July 2017
First home buyers will be able to save for a deposit by making voluntary concessional and non-concessional super contributions. Contributions will be limited to $15,000 per year (up to a total of $30,000) and will count towards the relevant contribution cap.
Withdrawals can be made from 1 July 2018. Concessional contributions plus assumed earnings withdrawn will be taxed at the person’s marginal tax rate, less a 30% tax offset.
The Government has provided an online estimator to help individuals calculate the potential benefit of the scheme.
Taxation
Medicare levy increase
Date of effect: 1 July 2019
The Medicare levy will increase from 2% to 2.5% pa to fully fund the National Disability Insurance Scheme. This increase will flow to a range of other taxes such as Fringe Benefits Tax.
Small business accelerated depreciation
Date of effect: 1 July 2017
The ability for small businesses with an annual turnover of $10 million or less to claim an immediate deduction for eligible assets costing less than $20,000 each will be extended for 12 months.
HELP thresholds and rates
Date of effect: 1 July 2018
The annual income threshold at which Higher Education Loan Program (HELP) repayments commence will be reduced to $42,000 (currently $54,869). Also, the repayment rate will start at 1% and increase progressively to 10%.
Social Security
Pensioner Concession Card
Date of effect: From 1 July 2017
Individuals who lost entitlement to the Pensioner Concession Card as a result of the 1 January 2017 assets test changes will be reissued with the card.
Energy Assistance Payment
Date of effect: 20 June 2017
Age pensioners will be entitled to a one-off Energy Assistance Payment of $75 for singles and $125 per couple.
Residency requirements for pensioners
Date of effect: 1 July 2018
To be eligible for the Age Pension and Disability Support Pension (DSP), claimants will need to have 15 years of continuous Australian residence unless they have either:
- 10 years continuous Australian residence, with 5 years of this being during their working life, or
- 10 years continuous Australian residence, without having received an activity tested income support payment for a cumulative period of 5 years.
Existing exemptions will continue to apply for DSP applicants who acquire their disability in Australia.
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Disclaimer: This publication has been prepared for general information purposes only. It is not specific advice to any particular person. You should consult an authorised Align Financial adviser before making financial decisions.
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