May 2017

Federal Budget 2017-18, the Balancing Act

Newtown Real Estate Agent and former President of the Real Estate Institute of NSW, Rowen Kelly notes some of the key measures which may affect property and business owners.

• In regard to negative gearing, from 1 July 2017, the government will disallow deductions for travel expenses. For properties bought from 10th May 2017, the Government will limit plant and equipment depreciation deductions to only those incurred directly by investors.

• Extension of the small business instant asset write-off scheme allowing businesses with turnover up to $10 million to immediately write off expenditure up to $20,000 for a further year (originally due to finish on June 30, 2017).

• Amending the small business capital gains tax concessions to ensure that the concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.

• Confirmation of the Government's intention to reduce corporate tax rate to 25 per cent for all businesses.

• Restore requirements preventing developers from selling more than 50 per cent of new developments to foreign investors.

• First-home buyers will be allowed to salary-sacrifice contributions for a home deposit from pre-tax pay into the First Home Super Savers Scheme, using their existing superannuation account and attracting the same tax advantages of superannuation. Contributions will be limited to $30,000 per person and $15,000 per year.

• From 1 July 2018, individuals aged 65 and over will be able to downsize their family home and place proceeds up to $300,000 per member into their superannuation fund without breaching any of the current superannuation caps, work test and age test.

• The Medicare Levy will be increased from 2% to 2.5% from 1 July 2019.

Source: Paul Simeoni Director, FCPA, FP, JP, Auditor

Simeoni Pty Limited, Accountants