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This year’s federal Budget (handed down on 9 May 2017) did not propose major changes to superannuation. There were some minor changes aimed at helping people at both ends of the housing market.

Yet to be legislated, these changes will help first home buyers to save for a deposit using voluntary contributions in their super fund, and encourage retired home owners to downsize. There were also some changes to tighten up the rules for self-managed super funds that may make them a less appealing option for people who want to borrow to buy residential property. Income tax rates remain unchanged other than an increase in the Medicare levy to fund the National Disability Insurance Scheme.

Here are the super measures and income tax rates that may affect you if the Government is able to get the changes through parliament. As always, if you have any questions about the proposed super changes and how they could affect you, please call our Member Services team on 1300 300 820 (8:30am - 5:00pm AEST, Monday to Friday)

 

Proposed changes to superannuation

  • If this change is legislated, and you are aged 65 or over and sell your home, you will be able to contribute up to $300,000 as a non-concessional contribution into superannuation from 1 July 2018. These contributions will be in addition those currently permitted under existing rules and caps. This measure will apply to the sale of your principal residence (provided you have owned it for at least ten years). Both members of a couple will be able to take advantage of this measure for the same house.

  • If legislated, the Government will allow first home buyers to withdraw voluntary concessional and non-concessional contributions to superannuation made from 1 July 2017 for a first home deposit (referred to as the First Home Saver Super Scheme). If you are saving for your first home, you will be able to make voluntary contributions of up to $15,000 a year up to a cumulative total of $30,000, that you will then be able to withdraw to fund your first home deposit. Withdrawals can begin from 1 July 2018 and withdrawals for a deposit will be taxed at your marginal rate (less a 30% offset), and will be allowed from 1 July 2018. Couples will be able to combine their super savings for a single deposit.

  • Measures have been proposed to make it more difficult for self-managed superannuation funds (SMSFs) to borrow money to buy residential property and use related party transactions on non-commercial terms to increase superannuation saving from 1 July 2018.

  • The Superannuation Complaints Tribunal will be replaced with a new body that will look after complaints across the financial services industry starting from 1 July 2018 with a cross over period lasting to 2020.

  • The current tax relief for merging superannuation funds (excluding SMSFs) will be extended until 1 July 2020. 

 

Propsed tax changes for individuals

  • No changes to personal income tax rates were announced in the Federal Budget, so the rates for the 2017-18 year will remain the same as for the 2016-17 year.

Taxable income threshold range($)

Resident individual 2017-18 marginal income tax rate (%)

Non-resident individual 2017-18 marginal income tax rate (%)

0-18,200

0

32.5

18,201-37,000

19

32.5

37,001-87,000

32.5

32.5

87,001-180,000

37

37

180,001+

45

45

*excludes Medicare levy

 

  • The Medicare levy will be increased from 2% to 2.5% of taxable income from 1 July 2019. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased. All revenue generated by the Medicare levy will be used to support the National Disability Insurance Scheme (NDIS) and to guarantee Medicare.

How much extra tax will I pay per year?

What you earn

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

Extra tax

$125

$250

$375

$500

$625

$750

$875

      • The Temporary Budget Repair levy of 2% of taxable income in excess of $180,000 will expire on 30 June 2017 under existing law. The Government has made no changes in this year’s Budget to extend the levy. Excluding the impact of the Medicare levy, from 1 July 2017, the top marginal tax income tax rate will be 45%.

       

       

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