Last night, Federal Treasurer Scott Morrison handed down his

second Federal Budget.

Here’s a roundup of some of the key proposals put forward,

and a look at how they might affect your financial goals —

whether you’re starting out in your working life, building

a career and family, or enjoying the fruits of your labour

in retirement.

Remember, at this stage these are just proposals and not

yet law. As such, they could change as legislation passes

through parliament.


1. First Home Super Saver Scheme

Proposed effective date: 1 July 2017

From 1 July 2017, individuals will be able to make voluntary

contributions (eg salary sacrifice and non-concessional

contributions) of up to $15,000 per year and $30,000 in total,

to their super account to purchase a first home. These limits

apply to each individual so a couple can contribute up to

$30,000 per year and $60,000 in total.

Voluntary contributions under this scheme must be made

within existing super caps.

Withdrawals of the contributed amounts along with the

deemed earnings will be allowed from 1 July 2018. The

amount of earnings that can be released will be calculated

using a deemed rate of return based on the 90-day Bank

Bill rate plus three percentage points (currently this equates

to 4.78%).

The withdrawals of concessional contributions and associated

earnings will be taxed at the individual’s marginal tax rate,

less a 30% tax offset. When non-concessional amounts are

withdrawn, they will not be taxed, but we anticipate that the

earnings will be taxed at the individual’s marginal tax rate,

less a 30% tax offset.

The First Home Super Saver Scheme will be administered

by the Australian Tax Office (ATO), which will determine

the amount of contributions that can be released and will

instruct super funds to make these withdrawal payments.

The ATO will also be responsible for compliance to ensure that

people purchase their first home after they withdraw from

super for their deposit.

2. Contributing the proceeds of property downsizing

to super

Proposed effective date: 1 July 2018

Currently, if you are aged 65 to 75 and want to make

voluntary super contributions, you must satisfy a work test.

If you are over 75, you are generally unable to contribute to

your super.

The government proposes that from 1 July 2018, people

aged 65 and over will be able to make a non-concessional

contribution into their super of up to $300,000 from the

proceeds of selling their home, irrespective of their age, work

status or total super balance.

Both members of a couple will also be able to take advantage

of this measure for the same home, meaning $600,000 per

couple can be contributed to super under this measure.

To be eligible, the property must be a principal place of

residence owned for a minimum of 10 years.

These contributions will be in addition to any other

concessional or non-concessional contributions you are

eligible to make.

Taxation – general

3. Marginal tax rates remain unchanged

Marginal tax rates are unchanged from 2016–17. As legislated,

the Temporary Budget Repair Levy – which is an additional 2%

on the top marginal tax rate – will expire on 30 June 2017.

Resident and non-resident marginal tax rates for 2017-18 are

shown in the table below.

Residents Non-residents

Income ($) Marginal

tax rate (%)

Income ($) Marginal

tax rate (%)

0 – 18,200 0

18,201 – 37,000 19 0 – 87,000 32.5

37,001 – 87,000 32.5

87,001 – 180,000 37 87,001 – 180,000 37

> 180,000 45 > 180,000 45

Note: Medicare levy may also apply, see overleaf.

2017–18 Federal Budget – client briefing

10 May 2017

4. Increase to Medicare levy

Proposed effective date: 1 July 2019

The Medicare levy, which is still assessed on taxable income,

is proposed to increase from 2% to 2.5% from 1 July 2019.

The increase in the Medicare levy will be used to fund the

National Disability Insurance Scheme (NDIS).

Other tax rates that are linked to the top marginal tax rate

(ie 47.5% following the increase) will also rise, such as the

fringe benefits tax rate.

5. Increasing the Medicare levy

low income thresholds

Proposed effective date: 1 July 2016

The Medicare levy thresholds for low income singles, families,

seniors and pensioners will increase in the 2016–17 income

year. The increases are based on movements in the consumer

price index (CPI) so that low income earners are generally not

liable for the Medicare levy.

The threshold for singles will increase to $21,655. The family

threshold will increase to $36,541 plus $3,356 for each

dependent child or student.

For senior singles and pensioners, the threshold will increase

to $34,244. The family threshold for seniors and pensioners

will increase to $47,670, plus $3,356 for each dependent child

or student.

6. Residential investment property – disallowance

of deduction for travel expenses and limitation

on deductible depreciation

Proposed effective date: Various

From 1 July 2017, travel expenses incurred in inspecting,

maintaining or collecting rent on your residential investment

properties will no longer be tax deductible. As a residential

property investor, you will continue to be able to deduct fees

paid to real estate agents or other property managers for

these services.

In a separate proposal, depreciation deductions for plant

and equipment – such as dishwashers and ceiling fans – in

residential investment properties will be limited to the actual

expenditure you incur.

This is an integrity measure designed to ensure that

successive purchasers of a property cannot depreciate an

asset beyond its true cost.

Taxation – small business

7. Instant asset tax write-off extension

Proposed effective date: 1 July 2017

The government has announced a further extension until

30 June 2018 of the accelerated depreciation rules.

This will allow businesses with annual aggregated turnover

of less than $10 million to immediately deduct purchases of

eligible assets costing less than $20,000 where first used, or

installed ready for use, by 30 June 2018.

8. Company tax rate reduction

Legislated from: 1 July 2016

Federal Parliament has now also finalised passage of

legislation to reduce the company tax rate.

The first step involves reducing the corporate tax rate for

companies that are small business entities, from 28.5% to

27.5%, for the 2016–17 income year. Small business entities

are classified as companies that carry on a business and have

an annual aggregated turnover of less than $10 million.

Other companies remain subject to the 30% corporate tax rate.

The second step involves subsequent increases in this annual

aggregated turnover threshold so that progressively larger

companies with annual aggregated turnover under $50

million will qualify for the 27.5% corporate tax rate.

For companies with annual aggregated turnover under $50

million the tax rate will progressively reduce to 25% from the

2026–27 income year.

9. Unincorporated businesses – annual aggregated

turnover threshold

Legislated from: 1 July 2016

This offset is available to unincorporated small businesses and

is currently 5% of the individual’s net small business income

tax liability capped at a maximum offset of $1,000 per annum.

The annual aggregated turnover threshold from 1 July

2016 is to be increased to $5 million (up from $2 million)

for unincorporated business looking to qualify for the small

business income tax offset.

This small business income tax offset will progressively

increase to 16% of an individual’s tax liability related to their

net small business income by the 2026–27 tax year.

For the 2016–17 to 2023–24 tax years, the tax offset is to

increase to 8% (up from 5%).

Families and Social Security

10. Liquid Asset Waiting Period (LAWP) extended

Proposed effective date: 20 September 2018

Currently, if you apply for Youth Allowance, Austudy, Newstart

or Sickness Allowance, you are required to serve an LAWP to

reflect their available liquid assets. However, there is no LAWP

if you have less than $5,000 (single) or $10,000 (couple) in liquid

assets. If you exceed these thresholds, you may be required to

serve a waiting period of between one and 13 weeks.

The government is proposing to increase the maximum LAWP

from 13 weeks to 26 weeks.

11. Changes to Newstart activity tests for over 55s

Proposed effective date: 20 September 2018

A new participation framework will apply from

20 September 2018:

–– If you are aged 55 to 59, you will only be able to meet

up to half of your participation requirements through

volunteering, and

–– If you are aged between 60 and Age Pension age, your new

activity requirement of 10 hours per fortnight can be met

through volunteering.

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What you need to know

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take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the

appropriateness of this advice having regard to those matters and consider the product disclosure statement before making a decision about

the product. AMP Life is part of the AMP group and can be contacted on 131 267. If you decide to purchase or vary a financial product, AMP Life

and/or other companies within the AMP group will receive fees and other benefits, which will be a dollar amount or a percentage of either the

premium you pay or the value of your investments. You can ask us for more details.

12. Pensioner Concession Card reinstated

Proposed effective date: 2017–18

Due to the assets test changes that came in on 1 January

2017, some pension recipients were no longer entitled to a

payment and as a result lost their Pensioner Concession Card

(PCC). At the time those affected were issued with a Low

Income Health Card and in some cases, a Commonwealth

Seniors Health Card.

Although these cards provide you with access to discounted

medication under the Pharmaceutical Benefits Scheme, they

don’t provide all the ancillary benefits that the PCC provided.

The government will reinstate the PCC to those who lost

their payment as a direct result of the 1 January 2017

asset changes.

13. One-off energy assistance payment

Proposed effective date: 20 June 2017

If you currently receive a qualifying income support payment,

you are eligible for a one-off payment of $75 for singles and

$125 for couples combined to assist with energy bills.

Qualifying payments include the Age Pension, Disability

Support Pension, Parenting Payment Single, Veterans’ Service

Pension, Veterans’ Income Support Supplement, Veterans’

Disability Payments, War Widow Pension, and permanent

impairment payments under the Military Rehabilitation and

Compensation Act 2004.

14. Changes to residency requirements

for pensioners

Proposed effective date: 1 July 2018

Currently, to be eligible for the Age Pension and Disability

Support Pension (DSP), you must have 10 years of total

Australian qualifying residency. This must include at least one

period of five years or more of continuous residency.

From 1 July 2018, applicants will require one of the following

to be met instead:

–– 15 years of continuous Australian residency

–– 10 years of continuous Australian residency, with five of

these years being during your working life (age 16 to 65), or

–– 10 years of continuous Australian residency, without

having received an activity-tested income support payment

(eg Newstart) for a cumulative period of five years.

15. Reform of working age payments

Proposed effective date: Various

To simplify the social security system, seven working age

payments will be combined or phased out completely.

From 20 March 2020, Newstart allowance and Sickness

allowance recipients will transfer to a new Jobseeker Payment

at the same rate.

Widow Allowance will be closed to new entrants as at

1 January 2018. The payment will cease to exist in January 2022

when all existing recipients will have reached Age Pension age.

Bereavement Allowance, which is a temporary 14-week

benefit to compensate those adjusting to the loss of a

partner, will cease from 20 March 2020. Jobseeker Allowance

will have bereavement provisions built in from this point to

allow exemptions from the activity test (ie looking for work)

for 14 weeks.

The following payments, which are no longer open to new

applicants, will cease.

–– Wife Pension: Will cease from 20 March 2020 and

recipients will transfer to Age Pension, Carer Payment or

Jobseeker Payment depending on their circumstances.

If you switch to the lower Jobseeker Payment, you will

maintain your previous payment level.

–– Partner Allowance: Will cease on 1 January 2022, when all

current recipients have reached Age Pension age.

–– Widow B Pension: Existing recipients will transition to Age

Pension on 20 March 2020.


16. Earlier Budget measures being abandoned

Proposed effective date: Various

The government will not proceed with the unlegislated

components (sometimes referred to as ‘zombie measures’) of

measures reported prior to the 2016–17 Budget. This includes

the following measures:

–– Increasing the age of eligibility for Newstart allowance and

Sickness allowance

–– Cessation of the education entry payment and the

pensioner education supplement

–– Pharmaceutical Benefits scheme – increase in copayments

and safety net thresholds

–– Australian Working Life Residence – tightening

proportionality requirements

–– Youth Employment strategy – revised waiting period for

youth income support

–– Family Payment reform:

–– phasing out end of year supplements and limiting FTB

Part B to single families with a youngest child aged

under 17 years, and

–– reducing FTB Part B for single parents with a youngest

child aged 13–16

–– Paid Parental Leave — removing the mandatory obligation

for employers to administer payments

–– The increase to Family Tax Benefit (Part A) of $10.08 per

fortnight starting from 1 July 2018.

Preston Enterprise (WA) Pty Ltd (ABN 84 021 202 454 ) t/as Vision financial Strategies and Southern Financial Strategies, Authorised representative and credit representative of Charter Financial Planning Limited.

This Electronic News Article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

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