1. Summary of key measures
Federal Budget 2017
Summary of key measures

2. Important information and disclaimer
This presentation has been prepared by GWM Adviser Services Limited (ABN , AFSL ) (‘GWMAS’), a member of the National Australia Bank group of companies (‘NAB Group’), 105–153 Miller Street, North Sydney Information in this publication is accurate as at 9th May 2017.
Any advice in this presentation is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this presentation as the basis for making any decision. Please seek personal advice prior to acting on this information.
While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither GWMAS nor any member of the NAB Group, nor their employees or directors give any warranty of accuracy, accept any responsibility for errors or omissions in this document.
Any case study in this publication is for illustration purposes only. Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent. .

3. Housing affordability
Federal Budget 2017
Key measures
Housing affordability
Taxation
Social Security
Super contributions
The Federal Budget was handed down on 9th May Compared to last year, the Budget was not as significant in terms of its overall impact on our clients, strategies and the broader industry. There were however some important announcements that may impact you, or may provide you with new opportunities.
It is important to understand that the measures announced in the Budget are proposals only and will not become law until legislation is passed.
We will summarise some of these key measures as they were announced.

4. Taxation

5. Personal taxation Increase to Medicare levy From 1/7/2019
Increase from 2% to 2.5%
Other tax rates based on top MTR will increase
Fringe Benefit Tax rate will increase
HELP threshold rates and payments From 1/7/2018
Annual income repayment threshold reduces from $55,869 to $42,000
Repayment starts at 1% and increases to 10%
HELP thresholds and rates
Date of effect: 1 July 2018
The rate at which Higher Education Loan payments are required to be repaid is dependant upon the person’s salary. The rate of repayment increases with salary as a percentage of income that is assessed for this purpose.
The annual income threshold at which Higher Education Loan Program (HELP) repayments commence will be reduced to $42,000 (currently $54,869). Also, the repayment rate will start at 1% and increase progressively to 10%.
Medicare levy increase
Date of effect: 1 July 2019
The Medicare levy will increase from 2% to 2.5% pa to fully fund the National Disability Insurance Scheme. This increase will flow to a range of other taxes such as Fringe Benefits Tax.
Low income earners will continue to receive relief under the low-income thresholds, and existing Medicare levy exemptions will remain in place.

6. Taxation- small business Extended until 30 June 2018
Immediate deductibility of eligible purchases
Small business (annual turnover $10m or less)
Immediate deduction will be available for eligible assets costing less than $20,000
Date of effect: 1 July 2017
Currently, small businesses with an annual turnover of $10 million or less are able to claim an immediate deduction for eligible assets costing less than $20,000 each. This measure will be extended for a further 12 months, until 30 June 2018.

7. Superannuation

8. Contributions from downsizing From 1 July 2018
Unclear if dwelling was vacant or rented for a time
No work test
No age restriction
No $1.6m total super balance limit
Any additional proceeds may be contributed under ordinary NCC cap
Limit- per person
Up to $300,000 sale proceeds from family home
Additional limit above normal NCC cap
Must have owned home for 10+ years
No other restrictions on contribution
Date of effect: 1 July 2018
Individuals aged 65 or older will be able to make non-concessional (after tax) super contributions of up to $300,000, using proceeds from the sale of the family home. This limit will:
-apply on a per person basis
-be in addition to the ordinary non-concessional contribution cap, and
-be available where the home has been owned for at least 10 years.
Unlike other non-concessional contributions, it will not be necessary to meet a work test or have a ‘total super balance’ under $1.6 million (total super balance includes the total of accumulation accounts, pension balances, and in-transit rollovers). Also, ordinarily once you reach age 75 you are no longer eligible to make any NCCs regardless of whether or not you meet the work test, however this age limit will not apply to contribution of sale proceeds.
The amount contributed will not be exempt from the assets test used to assess eligibility for the Age Pension.

9. First home saver super contributions From 1 July 2017
Voluntary contributions to super to save first home deposit
How much?
Applies to
Tax on withdrawals
$15,000 per year
$30,000 maximum
Contributions from 1/7/2017
Contributions + earnings accessible 1/7/2018
Concessional contributions, any associated earnings
Taxed at marginal rate – less 30% tax offset
Go to: budget.gov.au/estimator/ to calculate possible benefits
First home super saver scheme
Date of effect: From 1 July 2017
First home buyers will be able to save for a deposit by making voluntary concessional and non-concessional super contributions. Contributions will be limited to $15,000 per year (up to a total of $30,000) and will count towards the relevant contribution cap.
Withdrawals of amounts contributed (plus associated earnings) can be made from 1 July Concessional contributions plus any assumed earnings withdrawn will be taxed at the person’s marginal tax rate, less a 30% tax offset.
The Government has provided an online estimator to help individuals calculate the potential benefit of the scheme.

10. SMSFs and borrowing
Self Managed Super Funds – Limited Recourse Borrowing (LRBA)
Will apply to newly established loans
LRBA balance Included in ‘total super balance’ (TSB). TSB determines eligibility to:
Make NCCs
Qualify for Government Co-contribution and Spouse Contribution Tax Offset
Make ‘catch up concessional contributions’ from 1/7/2018
Repayments of LRBA using accumulation interests
Will count towards ‘transfer balance cap’ if asset with borrowing also supports a pension
Transfer balance cap limits total lifetime transfers to retirement pension phase
SMSF borrowings
Date of effect: From 1 July 2017 (subject to legislation)
The loan balance of newly established limited recourse borrowing arrangements (LRBAs) will be included in an individual’s ‘total super balance’. The total super balance is used to determine a person’s ability to:
-make non-concessional contributions
-qualify for a Government co-contribution or a spouse contribution tax offset, and
-make catch-up concessional contributions above the annual caps from 1 July 2018, where certain conditions are met.
Also, repayments made from the SMSFs accumulation balance will count towards the member’s transfer balance cap, if the borrowing supports a pension account. The transfer balance cap limits the total lifetime transfers a person can make to retirement phase pensions.
Grandfathering will apply to existing LRBAs, meaning that they are exempt from these new rules. The new rules will only apply to new LRBAs established after the passage of legislation (from the first 1 January, 1 April, 1 July, or 1 December after the passage of legislation).

11. Social security

12. Age Pension
Reinstatement of Pension Concession Card (PCC) for previous recipients
Where pension entitlement lost 1/1/2017 (assets test changes)
Previously were provided with CSHC and Low Income Card
Pension Concession Card – to be reinstated
Pensioner concession card
Date of effect: From 1 July 2017
Individuals who lost entitlement to the Pensioner Concession Card as a result of the 1 January 2017 assets test changes will be reissued with the card.

13. Energy assistance payment
One-off payment
$75 (single) $125 (couple)
To assist with energy costs
Payable to those entitled 20/6/2017
Age Pension
DSP Service Pension
Energy Assistance Payment
Date of effect: 20 June 2017
Eligible pensioners will be entitled to a one-off Energy Assistance Payment of $75 for singles and $125 per couple. A number of recipients will be eligible, including Australian residents who qualify for the Age Pension, Disability Support Pension and Service Pension.

14. Residency requirements- pensioners From 1 July 2018
Qualification for Age Pension or Disability Pension
15 years of continuous Australian residence unless either
10 years of continuous residence - 5 years being during working life (16 to Age Pension age), or
10 years continuous residence – no receipt of activity tested payment for 5 years total (eg. Newstart)
Residency requirements for pensioners
Date of effect: 1 July 2018
To be eligible for the Age Pension and Disability Support Pension (DSP), claimants will need to have 15 years of continuous Australian residence unless they have either:
10 years continuous Australian residence, with 5 years of this being during their working life, or
10 years continuous Australian residence, without having received an activity tested income support payment for a cumulative period of 5 years.
Existing exemptions will continue to apply for DSP applicants who acquire their disability in Australia.

15. Liquid assets waiting period (LAWP) Applies where liquid assets:
Liquid Assets Waiting Period Newstart, Youth Allowance, Austudy and Sickness Allowance 20 September 2018
Liquid assets waiting period (LAWP)
LAWP =
Period where nil entitlement if ‘liquid assets’ above limits
Liquid assets include:
- bank accounts
- term deposits
- shares
Applies where liquid assets:
- $18,000 singles (no dependents)
- $36,000 couples (or singles with dependents)
Maximum period currently 13 weeks- increasing to 26 weeks
Liquid assets waiting period
Date of effect: 20 September 2018
The maximum Liquid Assets Waiting Period (LAWP) will increase from 13 to 26 weeks. The LAWP is a period that an individual is expected to utilise their own savings prior receiving Government income support. The new maximum period will apply to:
singles without dependents with liquid assets of more than $18,000, or
couples or single with dependents with liquid assets of more than $36,000.
Liquid assets are readily available assets such as bank accounts, terms deposits, shares and managed funds.

16. Family Tax Benefit Family Tax Benefit – Part A and B From 1/7/2017
Indexation of payment rates- frozen for two years
Indexation will resume – 1 July
Family Tax Benefit – Part A From 1/7/2017
New single income test taper rate to determine eligibility
Taper rate 30 cents for each dollar above $94,316
Family Tax Benefits – Part A
Date of effect: 1 July 2018
A single taper rate of 30 cents in the dollar will apply to income that exceeds the Higher Income Free Area ($94,316 in 2016/17). Currently, two tests are applied and the higher payment determines the entitlement.
Family Tax Benefit – Part A and B
Date of effect: 1 July 2017
Family Tax Benefit payment rates will not be indexed for two years. Indexation will resume on 1 July 2019.

17. Opportunities

18. Impacts and Opportunities
Superannuation
Super continues to be attractive for retirement savings
Opportunity to save for home in a tax effective manner via contributions Additional super contributions- downsizing
Social security
Relatively minor changes for most
Primary entitlements not significantly impacted
Impact on me?
Make an appointment with your financial adviser to understand how these changes may impact you, and how to maximise your opportunities