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The Australian government has just announced 2017 Federal Budget tonight. At Pitt Martin, we closely keep update our knowledge with government tax legislation and economy changes. Here is some key points we think can be relevant to the tax payers and business owners.

Housing

  • Assisting first home buyers to build a deposit inside superannuation. Voluntary contributions of up to $15,000 per year and $30,000 in total will attract concessional tax treatment under the First Home Super Saver Scheme. This voluntary contribution can be salary sacrifice. The concessional tax rate will be 15% rather than personal marginal rate which is normally over 30%. The scheme commences on 1 July 2017, and contributions and deemed earnings, net of tax, can be withdrawn from 1 July 2018;
  • Allowing older Australians to contribute downsizing proceeds into superannuation. From 1 July 2018, individuals aged 65 and over will be able to make a non-concessional contribution of up to $300,000 in proceeds from the sale of a principal residence, held for at least 10 years, into their superannuation. These new contributions will be in addition to any other voluntary contributions that people are able to make under the existing contribution rules and concessional and non-concessional caps. That means potentially such an individual can make overall $625,000 contribution into their super fund in one year from 1 July 2018 by current law;
  • Capital gains tax (CGT) will be increased to 60% for investment in affordable housing. Allowing Managed Investment Trusts to be used to develop and own affordable housing, providing investors in affordable housing with greater income certainty by enabling direct deduction of welfare payments from tenants;
  • Strengthening the capital gains tax (CGT) rules to reduce the risk that foreign investors avoid paying CGT in Australia, including by no longer allowing foreign or temporary tax residents to claim the main residence CGT exemption, and by expanding the scope of the CGT withholding system for foreign residents;
  • Encouraging foreign owners of residential real estate to rent their properties out by applying a ‘ghost tax’ of at least $5,000 (reflecting the original application fee) to foreign owners who leave their properties unoccupied or not available for rent for 6 months or more each year.

  • Disallow deductions for travel expenses related to owning a residential investment property. Better target plant and equipment depreciation deductions to those expenses actually incurred by investors.

Business

  • More tax breaks and red tape reduction are on the cards this year, with the $20,000 instant asset tax write-off introduced in the 2016 budget being extended for another year until 2018, and opened up to businesses with an annual turnover of up to $10 million which is used to only up to $2 million.
  • From March next year, government introduce a levy on foreign workers on certain skilled visas will go towards a new Skilled Australians Fund.

Small business employer will have to pay $1200 per year for a foreign worker, along with a one-off $3000 payment. Larger businesses employer would pay $1800 a year per worker, along with a one-off payment of $5000.

  • The Government is stamping out hybrid tax abuse by multinational banks and insurance companies to prevent the exploitation of tax differences between countries. The Government is also toughening the Multinational Anti-Avoidance Law by extending it to corporate structures involving foreign partnerships and foreign trusts.
  • The Government is extending the taxable payments reporting system to contractors in the courier and cleaning industries and also banning technology that allows businesses to falsify sales records to avoid paying tax.

Medicare Levy

  • The Government will increase the Medicare levy from 2 per cent to 2.5 per cent of taxable income from July 1, 2019 to fund the National Disability Insurance Scheme. You’ll only be exempt if your income is below the threshold of $21,655 for singles, $36,541 for families and $34,244 for pensioners. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.

Need Help?

If you are unsure whether the 2017 Budget changes affect your tax position, or whether they open new options such as the First Home Super Saver Scheme, Pitt Martin Group can help you review and plan your affairs, weigh up super, property and business measures, and prepare for the rules that will apply.

As Sydney tax accountants, we assist taxpayers with tax planning, Budget impact reviews and practical business advice.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group, Sydney tax accountants, is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, Registered Australia Tax Agents, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.