Federal Budget 2017: Key Announcements

 

Superannuation

Additional non-concessional cap for retiree downsizers

From 1 July 2018, people aged 65+ will be able to contribute up to $300,000 into super from the sale of their principal home, if they’ve owned their home for at least 10 years. To facilitate this measure the Government will remove the existing contribution rules for those aged 65 and over making contributions under the new downsizing cap, including:

  • Removing the gainful employment requirement (‘Work Test’) between age 65 and 74
  • Removing the restrictions on contributions from age 75
  • Removing the restriction applying from 1 July 2017 on non-concessional contributions by a person with a total superannuation balance of over $1.6 million.

 

Super savings scheme for first home buyers

From 1 July 2017, first home buyers will be able to make extra voluntary super contributions of up to $15,000 a year beyond their employer’s Super Guarantee payments, up to a total of $30,000. These contributions will be taxed at 15% and can be withdrawn to go towards the deposit on a first home. Withdrawals will be allowed from 1 July 2018.

 

Social Security

Reinstatement of Pensioner Concession Card entitlements

Pensioners who lost their Pensioner Concession Card entitlement due to the assets test changes on 1 January 2017 will have their card reinstated. Those who lost their entitlement were instead issued with both a Health Care Card and a Commonwealth Seniors Health Card. However these cards provided access to fewer concessions than the Pensioner Concession Card.

Increased pension residence requirements

An individual currently needs to have at least 10 years’ residence in Australia (at least 5 of which are continuous) to qualify for the age pension or disability support pension. From 1 July 2018, they’ll need to have at least 15 years’ residence in Australia or either:

  • 10 years’ continuous residence including 5 years during their working life, or
  • 10 years’ continuous residence and not in receipt of an activity-tested income support payment for a cumulative period greater than 5 years.

 

Liquid assets waiting period increasing

Currently, applicants for Youth Allowance, Austudy, Newstart and Sickness Allowance are required to serve a liquid assets waiting period to reflect their available liquid assets. The maximum waiting period is currently 13 weeks for:

  • Singles with liquid assets exceeding $11,500
  • Couples with liquid assets exceeding $23,000

 

From 20 September 2018 the maximum waiting period will increase to 26 weeks for:

  • Singles with liquid assets exceeding $18,000
  • Couples with liquid assets exceeding $36,000

 

Taxation

 

A 0.5% Medicare levy increase from 2019

From 1 July 2019, the Medicare levy will increase by half a percentage point from 2% to 2.5% of an individual’s taxable income. The Medicare levy low-income thresholds for singles, families, seniors and pensioners will increase from the 2016–17 financial year.

 

Restrictions on deductions for residential property investments

From 1 July 2017, depreciation deductions for residential plant and equipment (e.g. dishwashers and ceiling fans) will be limited to investors who actually incur the outlay – not subsequent owners. Also from that date, investors will be unable to deduct travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

New levy for major banks

A major bank levy will be introduced for authorised deposit-taking institutions (ADIs) with licensed entity liabilities of at least $100 billion (indexed to Gross Domestic Product (GDP)). The levy will be calculated quarterly as 0.015% of a bank’s licensed entity liabilities (for an annualised rate of 0.06%). Importantly, the levy will not apply to deposits of individuals, businesses and other entities protected by the Financial Claims Scheme. That means that banks will not incur this cost on funds held by an individual of up to $250,000. Superannuation funds and insurance companies won’t be subject to the levy.

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Damien WRetired Head of Commercial Banking
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Jackie HCommunications Consultant
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Ian WRetired
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Kelvin & Melanie TConsultant
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