Understanding the 2017/18 Budget
On Tuesday 9 May, the Treasurer Scott Morrison handed down the 2017/18 budget.
At Advise Accountants we take pride in keeping our clients informed and up-to-date, and so we provide this succinct and concise version of the budget papers and have highlighted a number of announcements which are pertinent to our customers.
$20 000 IMMEDIATE DEDUCTION EXTENSION
The $20 000 instant asset write off for small business will be extended by 12 months to 30 June 2018, for businesses with an aggregated annual turnover of less than $10 million.
This measure is designed to improve cashflow for small businesses, providing a boost to small business activity and investment for another year.
Assets will need to be used or installed ready for use by 30 June 2018 to qualify for the higher threshold and on 1 July 2018, the immediate deductibility threshold will revert to $1000.
CHANGES TO GST ON NEW RESIDENTIAL PROPERTIES
Property Developers, who previously managed the GST on sales of newly constructed residential properties, will no longer do so. Purchasers will be required by 1 July 2018 to remit the GST directly to the ATO, as part of settlement.
FIRST HOME OWNERS TO USE SUPER FOR DEPOSIT
Individuals will be able to make voluntary contributions to their superannuation of up to $15 000 per year, and $30 000 in total, to be withdrawn as a first home deposit under the new ‘First Home Super Saver’ scheme.
Should the individual be self-employed or their employer will not allow contributions to be salary sacrificed, the Government will allow these people to claim a deduction for voluntary contributions made under the scheme.
DEPRECIATION DEDUCTIONS TO BE LIMITED
Investors purchasing property after May 9, 2017 will no longer be able to claim depreciation on plant and equipment acquired from the previous owner.
Investors will be able to depreciate new plant and equipment assets within a new property and items they add to their property.
This new legislation will be in force from July 1, 2017.
Travel related expense claims for investment properties to end
Deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property will be disallowed from 1 July 2017.
This measure will not prevent investors from engaging third parties such as real estate agents for property management services, which will remain deductible.
DOWNSIZING FOR THE OVER 65s
For those people sixty-five years or over, the Government will allow a non-concessional contribution of up to $300 000 for the proceeds of selling their principal residence, owned for the past ten years of longer. This will apply from 1 July 2018 and be available to both members of a couple for the same home.
Sales proceeds contributed to superannuation will count towards the Aged Pension Assets Test.
Both members of a couple can take advantage of this measure to buy their first home together under the scheme.
Merit Wealth, Budget 2017-18 and Budget Paper No 2..