Budget Tax Highlights – Individuals May 2017 (proposed but not legislated)

Individuals

How the recent Australian Tax Law Changes will impact you …

• Investors – Property owners – 3 important changes

1. From 1^st July 2017, you will no longer be able to claim travel expenses incurred to inspect, perform repairs, collect rent etc on rental property. So those who like to travel to inspect their investment property interstate you will no longer be able to claim this expense
2. From 9^th May 2017, if you purchase investment property after this date, you will no longer be able to claim depreciation on pre-existing plant & equipment assets eg dishwasher, curtains, flooring etc. However, building depreciation will still be claimable.
   If you pay for the equipment yourself then yes you can still claim it.
   Those who own rental properties prior to 9^th May 2017 will not be affected by this change.

3. From 1^st January 2018, affordable housing increase in CGT discount from 50% to 60% if residents elect to purchase community housing and rent it out lower then private market rate to low and moderate income families.

Budget Tip. Make sure you undertake or at least pay for any travel for rental properties you own prior to 30 June. If you have or are about to purchase a rental property you might want to consider purchasing plant and equipment such as dishwashers or plumbed-in fridges separately from the owner rather than including them as part of the house price and therefore not being able to claim them.

• Individuals – low income, Medicare levy for low income threshold increase the low-income threshold before which you have to pay the Medicare Levy to $21,655 for singles, $36,541 for families plus $3,356 for each dependent child, $34,244 for single seniors and pensions and $47,670 for senior and pensioner families plus $3,356 for each dependent child from the 2017 income year.
• Individuals – middle and higher income, Medicare Levy will increase from 2% to 2.5% from 1 July 2019 . This is to fund the shortfall for NDIS already provided for by removing Medical Expense Tax Offset Claims in prior years.

Saving for your first Home

To assist and encourage home ownership, you can now build a deposit inside your superannuation fund as follows:-

1. Voluntary contributions up to $15,000 per year and $30,000 in total can be contributed from 1^st July 2017 including salary sacrifices. They will be treated as concessional contributions ie at 15 % tax
2. Such contributions can be withdrawn from 1^st July 2018 onwards
3. Both members of a couple can take advantage of this measure to buy their first home

TAX WARNING: Total Deposit needed for a first home will be a lot more then what you can save within your superannuation fund however ensure you seek appropriate advice prior to using this facility to ensure you will be able to meet the deposit requirements

TAX TIP: New proposed state government laws from 1^st July 2017 to remove stamp duty for first home buyers

1. Abolishing stamp duty on all homes (existing and new) up to $650,000
2. reducing stamp duty for all homes (existing and new) between $650,000 and $800,000
3. provide a $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000
4. abolishing insurance duty on lenders mortgage insurance
5. Removing the entitlement to defer payment of stamp duty for 12 months on off the plan purchases by investors.

Higher Education Loan Program (HELP)

Revision of income thresholds for repayment of HELP debt from 1^st July 2018. New minimum threshold of $42,000 with 1% repayment and maximum threshold with 10 % repayment.

Seniors Selling your Main Residence

Individuals aged 65 or over and have owned their house for at least 10 years, can make a non-concessional contribution (NCC) up to $300,000 from the proceeds of the sale of their home and exempt from existing age test, work test and $1.6 million balance test

This is to encourage older people to downsize their larger homes for younger, growing families.

Budget Tip: If you’re considering selling your house next year you may want to hold off until after 1 July 2018 to take advantage of this measure. Of course, you want to consider other factors rather than just this one and whether it’s worthwhile holding off until after 1 July to take advantage, particularly if you have a higher superannuation balance.

Prior year Budget Changes implemented which can save you tax

Individuals

• Employees to claim personal super contributionsFrom 1^st July 2017 if you don’t have ability to sacrifice superannuation with your employer, you will now be able to do it from post-tax dollars so set up a monthly contribution to assist with this.
• Employees, Business Owners & InvestorsFrom 1^st July 2017, superannuation you sacrifice pre-tax will be reduced from $30,000 to $25,000 and any post concessional contributions will be capped to $500,000 for your life time.

Consider making pre-tax contributions up to $30,000 in 2017 year ie from 1^st July 2016.

If over 55, your cap will be reduced from $35,000 to $25,000 after 1^st July 2017.

• Employees, Business Owners & Investors Thresholds in superannuation funds where additional tax of 15% is paid from contributions will be reduced from $300,000 to $250,000 from 1^st July 2017. As a result, more higher income earners will pay 30% on overall superannuation contributions as to 15 % for rest of us

Your local CPA accountant at www.grimaaccounting.com.au, www.shellharbouraccountant.com.au