Scott Morrison delivered the budget speech last night. The theme was “fairness, security and opportunity” – but what does this really mean?
Small Businesses:
The $20k capital allowance instant asset write-off has been extended for another 12 months. This is a real boost to small business as they will be able to claim up to $20k in the same year equipment is purchased – which is great for cash flow. In order to be eligible for the write off, business’ need to have an annual turnover of under $10m. (Previously a $2m threshold – a very welcomed increase.)
Infrastructure:
$75b was allocated for infrastructure spending with the main impact for our client base being the new Western Sydney Airport which will commence in the second half of next year and is set for completion in 2026. It is hoped this will provide jobs, well needed infrastructure and increased productivity for our clients.
Housing Market:
A new First Home Super Savers Scheme is proposed to allow first home buyers to save for a home through their super fund. Contributions are taxed at 15% which is a saving for anyone earning over $45k. Limits of $30k per person and $15k per year apply. Depending on the conditions of release, these funds have potential to be very beneficial to our young clients trying to get into the market.
In addition, people aged 65 or over can make a non-concessional contribution into their superannuation fund from the proceeds of selling their homes. This is designed to free up housing and thereby increase supply which is hoped to place downward pressure of house prices -a definite improvement for all involved.
Increased Taxes:
Taxpayers will pay an additional 0.5% in medicare levy to fully fund the NDIS – the rate will be 2.5% from 1st July 2019. This is disappointing as it was hoped that the budget would be balanced through spending savings rather than extra taxes. I wonder if the delay in its introduction is timed to be after the next election – l may just be cynical.
A new bank levy will be introduced to the five major banks starting from 1st July 2017. This will raise an expected $6.2b to assist in balancing the budget over the next few years. Let’s hope that this increased cost for the banks is not just passed onto us, their customers.
Other Announcements:
- Foreigners will be excluded from the main residence exemption on their Australian Homes.
- If residential investments purchased by foreigners are vacant for a specified period of time (yet to be announced) a $5k levy will be applied annually.
- Developers will also be restricted to selling no more than 50% of new developments to foreign investors. This announcement is designed to ease pressure in the property market.
- Employers with workers on temporary work visas will need to pay a foreign worker levy of either $1.2k or $1.8k per worker. Those with workers on permanent skilled visas will pay an annual levy of either $3k or $5k. This strategy is looking at protecting jobs for Australians – its implementation will be interesting.
It is important to remember that these announcements are simply that – nothing changes until the budget passes through parliament. If you have any queries about any of the changes in the budget please contact our office.