How the budget will impact your family, business and super fund

Story contributed by Joe Kong, Northern Business Consultants (NBC).

This month we anxiously awaited the release of the budget for the 2017/18 financial year.  It was a night that had everyone in our office on the edge of their seats! We understand that not everyone is as excited as the budget as us, so we have created a breakdown of the main points that will impact Australian families, super and small business.

1. Business

A major change that benefits small business is the extension to the $20,000 asset write off for businesses with a turnover of less than $10 million. This was due to revert to $1,000 on 1 July but it has been extended until 30 June 2018. Read more about the $20,000 asset write off here.

Assets over $20,000 cannot be immediately deducted but can continue to be placed into the small business depreciation pool and depreciate at 15% in the first year and 30% each year after.

2. Super

The changes to super were minimal this budget, however, everyone should remember that the Super Reforms passed in November 2016 will come into effect on 1 July 2017, read more about that here.

Australian’s (over the age of 65) looking to downsize their family home will be able to make a non-concessional (after tax) contribution to their superannuation of up to $300,000 each from the proceeds of the sale from 1 July 2018. This incentive will free up larger homes for younger families.  It will be available to those over 65, who are selling their main place of residence, providing they have owned it for at least 10 years.

“These contributions will be in addition to those currently permitted under existing rules and caps and they will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions,” the Budget papers say.

A significant piece of legislation that was passed is the ability to salary sacrifice into super to encourage first home buyers to save for a deposit for their first home. This will allow for $15,000 per year to be sacrificed into super, up to $30,000 in total from 1 July 2017. Concessional contributions (before tax) and earning within the fund are both charged at a rate of 15%. It should also be noted the existing concessional and non-concessional caps still apply.

These contributions can be withdrawn from 1 July 2018 onwards, concessional (before tax) contributions and earnings that are withdrawn are taxed at the taxpayer’s marginal rate less 30% offset. Non-concessional (after tax) contributions are not taxed when they are withdrawn.

3. Families

There will be an increase in the Medicare levy low-income threshold from 1 July 2017.

  • For singles, the threshold will be increased to $21,655.
  • For families, the threshold will be increased to $ 36,541, plus $3,356 for each dependent student or child.
  • For seniors or pensioners, the threshold will be increased to $34,244.
  • The family threshold for seniors and pensioners will be increased to $47,670, plus $3,356 for each dependent child or student.
  • The Medicare levy will increase from 2% to 2.5% of taxable income as of 1 July 2019. The current exemptions to the Medicare levy will remain in place.
  • From 1 July 2017, there will be no deduction available for travel related expenses related to inspecting, maintaining or collecting rent for a residential rental property.

A highly comprehensive document on all changes in relation to the budget can be found here

If you have any questions or concerns about where you, your business or your superannuation stand from the release of the budget contact NBC on (07) 3862 8777 to discuss your situation.

Article from Northern Business Consultants blog at https://www.nbc.com.au/blog/

If you need assistance with your business structure, or advice on management of your business the experienced NBC consultants can assist you, contact Joe Kong (joek@nbc.com.au) or call 07 3862 8777 for an obligation free consultation.

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