The Federal Budget handed down by Treasurer Scott Morrison on 9 May 2017 contained various measures impacting individual taxpayers, small businesses, superannuation, first home buyers, property owners and investors. The key focus of this year’s budget was to address the housing affordability concerns that have risen as house prices (particularly in Sydney and Melbourne) are growing at rapid rates in the last few years.

Here are the key measures that may impact you. These are proposed measures and will be subject to much political “wrangling” before receiving Royal Assent. We will keep you updated on the final legislation that is passed.

Personal Tax

– Increase in Medicare Levy from 2% to 2.5% from 1 July 2019.

– Other tax rates linked to the Medicare Levy (eg. FBT) will also increase from 1 July 2019.

Superannuation

– From 1 July 2018, if you are 65 years or older, you can sell your home and make non-concessional super contributions up to $300,000. Conditions apply.

– From 1 July 2017, first home buyers can make voluntary super contributions capped at $15,000 per year (up to total of $30,000) and withdraw from 1 July 2018 for a deposit on their first home. Amounts withdrawn taxed at marginal rates less 30% tax offset.

Residential Real Property

– Purchasers of newly constructed residential properties will pay the GST on the purchase price direct to the ATO (instead of to the developer) from 1 July 2018.

– Depreciation deductions on investment properties disallowed if the assets were acquired on the purchase of the property (effective from 1 July 2017).

– Travel deductions on investment properties disallowed from 1 July 2017.

– Capital Gains Tax (CGT) discount for individuals on capital gains on qualifying affordable housing investments will be 60% from 1 January 2018.

Foreign Real Property Investors

– Annual charge levied if property is not occupied or not available for rent for 6 months or more per year effective from 9 May 2017.

– Ineligible for the main residence exemption on the sale of Australian real property effective from 9 May 2017. Exemption for existing holdings until 30 June 2019.

– Reduction in CGT withholding threshold for foreign tax residents from $2M to $750,000 effective from 1 July 2017.

– CGT withholding rate increased to 12.5% (from 10%) effective from 1 July 2017.

– Cap of 50% foreign ownership in new property developments.

Small Business Concessions

– Instant asset write off for depreciating assets that cost $20,000 or less will be extended to 30 June 2018.

Employing Foreign Workers

– Businesses with <$10M turnover – annual levy $1,200 per employee on Temporary Skill Shortage visa and one-off $3,000 levy for permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

– Businesses with >$10M turnover – annual levy $1,800 per employee on Temporary Skill Shortage visa and one-off $5,000 levy for permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

– These levies will replace the current annual training benchmark financial obligations.

Cash/Black Economy

– ATO will receive a $32M funding boost to increase audit and compliance activities on the cash/black economy. Focusing on under-declaring income, non-lodgement of returns and non-payment of employer obligations.

– Couriers and cleaners will need to report annual payments to all contractors to the ATO from 1 July 2018.

Extra Tax on Banks

– “Major Bank Levy” of 0.06% will be levied on the Big 4 and Macquarie Bank from 1 July 2017. It will be levied on customer deposits above $250,000, corporate bonds, commercial paper, certificates of deposit and Tier 2 capital instruments.

– While it may be a politically a popular measure, we will wait and see how the banks pass this onto their customers and who will ultimately pay for it.

Higher Education

– Taxpayers with HELP debt will repay their loans earlier with the lowering of the annual repayment income threshold to $42,000 from 1 July 2018.

– Commonwealth funding for students certain courses will be restricted for Australian permanent residents and New Zealand citizens from 1 January 2018.

Family Tax Benefits

– Family Tax Benefit Part A supplement payments reduced by $28/fortnight for each child that does not meet immunisation requirements from 1 July 2017.

Please contact us to find out more on how the Federal Budget will impact you and your business. The team at EMspire Advisory are experienced accountants in Sydney and would like to help you create, grow and succeed in business. So to find out more and if you can benefit from these tax measures, please contact us!

Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for specific advice for you and your circumstances.