On Tuesday 9 May 2017, the 2017/2018 Federal Budget was announced. As with any budget, there are winners and losers. Understanding how these changes might affect you are critical in securing your financial future for the years to come.
Below we have outlined the significant changes that we believe will have an impact on our clients. We recommend that you book in your end of financial year review appointment to discuss your individual situation.
Downsize to superannuation
If you are aged 65 or over, from 1 July 2018, you will be able to make a non—concessional contribution of up to $300,000 to your superannuation from the proceeds of selling your home. This applies to the sale of your principal home that you have owned for at least ten years and both members of a couple can take advantage. These contributions are in addition to those currently allowed under existing rules and caps.
Super Save Scheme for First Home
To help save for your first home, you will be able to contribute up to $15,000 per year and a total of $30,000 to your superannuation. From 1 July 2018, these contributions along with the earnings can be withdrawn for a first home deposit. Both members of a couple can take advantage of this. There are some tax implications associated with this, so please speak to us directly if you would like to take advantage of this strategy.
Residential Rental Property Deductions
Travel expenses relating to inspecting, maintaining or collecting rent will no longer be deductible from 1 July 2017. Plant and equipment depreciation deductions will be limited to outlays incurred by investors. Existing agreements in place will be honoured until either the asset is no longer owned or the assets reach the end of its practical life.
Armed with an additional $32 million the ATO will be targeting the cash economy. Cash-based businesses should ensure their point of sale systems have correct auditing trails, as you can expect more ATO audits.
The Medicare Levy will increase to 2.5% from 2.0% of taxable income from July 2019.
Depreciation for Small Business
If you have an annual turnover less than $10 million, you can immediately deduct purchases of eligible assets costing less than $20,000 if they are ready for use by 30 June 2018. This is a 12-month extension of their previous immediate deduction policy. Assets over $20,000 can still be deducted using the standard depreciation schedule. From 1 July 2018, the immediate deduction level will revert to $1,000.
Book in your End of Financial Year Meeting with us today!
This summary has just covered some of the many changes delivered in the budget. We recommend you book in your end of financial year meeting with us today. This way we can assist your current situation and outline how you can take advantage of these budget changes.
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