What to watch from the Budget?
There are lots of opinion pieces about the 2017 budget. We caught up to discuss the things our advisers noted in this year’s budget rollout.
Was there anything that surprised you?
There’s a sneaky change that has been announced for the Liquid Assets waiting period (LAWP) that affects new applicants for Centrelink benefits, typically Newstart and Disability Support Pension. They have stretched the LAWP from 13 weeks to 26 weeks. This is impactful for someone that may have become unemployed suddenly that has some money in the bank, from a redundancy or from some other savings, particularly when the LAWP acts as an exclusion period when benefits will not be payable,’ Simon Tworek, Financial Planner and Director said.
The government has expressed their faith in the economy, comments were made about historically low wage growth, inflation sitting at 2% is still low, but headed for growth, the Medicare levy changes target tax payers with an increase in medicare levy from 2.0% to 2.5%.The indicators are for growth.
The levy targeting banks starts in July 2017, the government made comment on their gaze at the banks to see if there are policy adjustments and warned against passing on the new tax levy to customers. So if not customers? What does this mean for shareholders of the big four banks and Macquarie? Tabitha Tworek, Financial Planner commented.
Opportunities for first home buyers (FHB) sell a good news story, but we await further information about the potential preservation rules on these funds? Is it really a significant benefit?
Simon asked ‘what first home buyers are earning 90-100k per annum to really benefit from salary sacrifice in the ideal tax category to benefit from this?’.
We are focussing on clarity for first home buyers to confirm, what happens if they don’t choose to move in as a principal residence? (as a rentvestor instead?) Is the concessional tax rate of 15% on contributions in and the Marginal Tax Rate on the way out going to have the full benefit we would expect?
What if you change your mind? And decided on travel, study or growing your family instead? How will preservation rules impact this for real first home buyers?
For Retirees, selling their principal residence, there are additional measures to encourage a last minute contribution limit increase for super contributions that may result. This is an area that may allow more flexibility to add to super beyond the current tax free limit, already being reduced to some $300,000 per individual from 1 July 2017. We’ll update you with more information as it is further clarified.
Property investor world will be impacted, the positives include the affordable housing initiatives and deferred Capital Gains Tax relief, increased from 50% discount to 60% discount upon the sale of the asset in the future for properties meeting the criteria.
Stay tuned in the Winter newsletter for an update on the impact to depreciation for existing property investors, and more news from the budget.