2017 Federal Budget - Individuals
Posted by Darren May 10, 2017
The federal budget has been handed down by the Treasurer Scott Morrison last night. And while the 2016 budget had substantial changes to it, the 2017 edition had less of an impact to SMSF holders. That said, there were still changes presented in the budget that as an individual you need to be aware of.
If you are currently holding an investment property, there are changes happening for you. Firstly, there is now a limit to what plant and equipment you can claim depreciation on. For example, if you purchase a new dishwasher you will be able to claim the depreciation. When you sell the property, the new owner can no longer claim the depreciation on that same dishwasher as it has already been claimed previously. This is to prevent people over depreciating an asset to potentially a higher value than its worth. However, if you purchase a new replacement, you can claim the depreciation on that new item. Secondly, you can no longer claim travel expenses to inspect, maintain, or collect rent on your investment property.
The Government has also made changes to Medicare – both the limits and levy. The Medicare levy will increase from 2% to 2.5% as of the 1st July 2019. To combat this, the low-income thresholds for Medicare are being raised as of the 1st July 2017 for singles, families, and pensioners.
The Government is encouraging home ownership by allowing first home buyers to build a deposit inside their super. From the 1st July first home buyers can do voluntary super contributions up to $15,000 per year, $30,000 as a couple but must remain within current caps. However concessional contributions and earnings in the fund still attract the 15% tax. These contributions can be withdrawn from the 1st July 2018 and onwards. However, when the funds are retrieved from super for the deposit, they are taxed at the taxpayers marginal rate less a 30% offset.
There was very minimal movement this year for superannuation funds from the Government. The most notable comes from those who are over 65 and what to downsize. The Government will allow a non-concessional contribution of up to $300,000 from the proceeds of selling your home.
Finally, for those who are paying a HELP debt off from study undertaken, the threshold has been reduced from the 1st July 2018. The previous threshold of $55,874 has now been reduced to $42,000.
Should you want any further clarification or need to obtain further details, please make an appointment to speak one of our experienced Senior Accountants to talk more about these changes.
The above information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Wards Accounting Group Pty Ltd (ACN 105 280 831) ABN 32 105 280 831 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361