MAC Budget 2017 (EDM)
Jamie McIntyre - May 11, 2017
No doubt you would have already read or heard a lot of information on the new budget so far. We are busy researching the detail on how these changes will impact our clients and are happy for you to call if you need any further explanation in the mean time.
On May 9, 2017, the federal budget for 2017-18 was handed down by Scott Morrison. The deficit is projected at $29.4 billion for the coming year, but the treasurer has promised surplus of over $7 billion by 2020-21.
Key takeaways include a $75 billion investment in national infrastructure projects including funding for new rail and roads in Victoria and Western Australia, as well as the long-awaited second Sydney airport.
A six basis point levy on Australia’s five largest banks was also announced, which will raise over $6 billion over the budget and forward estimates. This levy, on items such as customer deposits over $250,000 and corporate bonds, will be sought from ANZ, Commonwealth, Macquarie, NAB and Westpac from 1 July onwards. In addition, a new Australian Financial Complaints Authority will be established to resolve disputes, imposing fines ranging from $50-200 million for misconduct.
Such action against the major banks may – together with the dozen inquiries currently underway – help ward off calls for a royal commission into the banking sector, from media and politicians alike.
There is, of course, much else to be covered, but here is a snapshot of some winners and losers from the government’s new fiscal blueprint:
- Schools. The government last week announced the reintroduction of Gonski-style needs based funding, with an extra $2.2 billion for schools over the next four years. As a result, most schools will receive greater attention under what is being dubbed, “Gonski 2.0”;
- Homebuyers. Young people looking to buy their first home will now be able to salary sacrifice pre-tax and contribute up to $30,000 (up to $15,000 per annum) into their superannuation account, which can then be withdrawn to purchase a home, under the new First Home Super Savers Scheme. Negative gearing reforms, however, we left off the table;
- Small business owners. The government will be extending the “instant access write-off scheme” by another year, meaning small business owners can immediately claim up to $20,000 of necessary business purchases for tax purposes;
- Pensioners. The elderly will see their pensioner concession cards reinstated, and one-off payments to singles and couples to help manage rising electricity costs. Further, up to $300,000 in non-concessional proceeds from the sale of a primary home will be allowed into super or pension funds;
- Working parents with young children. An additional $37.3 billion is to be injected for almost one million Australian families utilising before and after school care programs, to ease the burden of such childcare costs;
- Persons living with disability. The NDIS will be fully funded and rolled out by 2020, paid for by an increase in the Medicare levy ranging from 0.5 to 2.5 per cent, depending on your tax bracket.
- University students. As announced last week, tertiary education fees are set to rise by 7.5 per cent, with students now expected to pay back fees at a lower salary threshold. Universities themselves will also be expected to find savings measures, with further cuts to funding looming;
- Catholic schools. While public schools will benefit from the re-direction of funding for education, wealthy independent school goers may be faced with higher fees, with reduced funding expected over the next ten years;
- Business with foreign workers. There will be an annual temporary work visa levy of $1200-1800 per year, and one-off skilled visa levies of $3000-5000. Monies raised from taxing businesses will go toward upskilling Australian workers;
- Wealthy families. There was no mention of increases to the family tax benefit, which means that families in the upper tax brackets may miss out on new income-tested payments.
We will be considering how best we can advise our clients, with regards to individual circumstances, following further analysis of the measures proposed last night.
As always, if you have any questions, please do not hesitate to contact our office.