Muirfield Budget Update – 2017

On 9 May, Treasurer Scott Morrison delivered the 2017 Budget. Morrison touched on quite a few points and declared that Australia will return to surplus in the coming years. There are some interesting changes that may come about due to the budget, and we have highlighted these below:

Home Proceeds and Superannuation

In the effort to make housing more affordable, Australians over the age of 65 are being encouraged to downsize their homes. Those who downsize their principle homes will be able to make an after-tax contribution of up to $300,000 into their Superannuation regardless of age and work tests and the $1.6 million pension cap.

Interestingly, both partners in a relationship can make the $300,000 contribution, meaning that a contribution of up to $600,000 per couple can be made to super.

Of course there are a couple of caveats, for example any contribution has to come from the proceeds of the principle residence and the home has to have been owned for at least 10 years.

Centrelink Pensioner Concession Card

In a win for individuals who lost the Centrelink Age Pension as a result of the 1 January 2017 Asset Test changes the Government has announced they will now automatically receive the Pensioner Concession Card. The card entitled recipients to cheaper rates, travel, pharmaceuticals and registration among many other entitlements.

Medicare Levy

In order to ensure the National Disability Insurance Scheme (NDIS) is fully funded the Medicare Levy will increase to 2.5% of taxable income beginning 1 July 2019. The new thresholds after which Medicare Levy will be charged will be increased from 1 July as follows:

First Home Deposits

Whilst this may not relate to you we thought the proposed legislation for first time home-buyers was an interesting change.

Beginning 1 July 2018 first time home buyers will have the option of withdrawing voluntary contributions to superannuation made from 1 July 2017. The voluntary contributions can then be used for a first home deposit. These buyers can save up to $15,000 a year with a maximum of up to $30,000 per person. When the savings are withdrawn, it will be taxed at their marginal rate, with a 30% tax offset.

Bank Levy

A 0.06% annual levy will apply to the big four banks along with Macquarie.  The new tax will be levied on various types of borrowing that banks use to fund their lending.  If passed by Parliament the levy is forecast to raise approximately $1.5 billion per year over the next 4 years following the intended introduction on July 1.

There are several other measures that were released in Morrison’s Federal Budget and it will be interesting to see how they progress. Much of the information on the changes is not yet clear, and much of it will remain so until the legislation has passed parliament. We will continue to keep you updated as more information is released.