Recently, Scott Morrison released the second budget for the Turnbull government. As always, there was a lot of information released so we have documented a few of the major points which may be of interest to you.
If you are thinking of purchasing a rental property, keep reading. Any investment property purchased after May 7, 2017, can not claim depreciation for Plant and Equipment embedded in the purchase price, if purchasing a pre-existing property. This eliminates the benefit of having a depreciation report prepared, as investors have done in the past. Don’t panic if you are already claiming deductions from a depreciation report, as any properties purchased prior to this date can continue to claim these deductions as they have done in the past.
Another change to rental property investment deductions is the elimination of travel expenses being deductible for travel costs between home and property. Our current financial year (16/17) is the last year you will be able to claim a deduction for travel to inspect, view or work on your investment property.
There is an increase to the Medicare Levy which will come into play in the 2019/20 financial year, it will increase to 2.5% from the current 2%. Also, the Low Income Threshold for the current financial year is $21,655 for a single person and $36,541 for a family, plus $3,356 for each dependant child or student. Not to forget the increase to the HELP repayments which are set to take effect from July 1, 2018. If you have a HELP debt and your earnings for the 2018/19 year reach $42,000, you will be required to repay 1% of the debt. As your earnings increase, so does the repayment rate, up to 10% of earnings of $119,882 and above.
Great news for small businesses, the 100% deduction of assets purchased under $20,000 will continue through the next financial year, these deductions will be allowed until the end of 2017/2018 financial year.
If you are looking to purchase your first home and eligible for First Home Buyer Grant (FHBG) the government has released a scheme to help savers accumulate their deposit using their superannuation fund. A great initiative to promote self funding as opposed to increasing borrowings.
The final big point which we found attractive is the ability of people aged 65 or more to contribute up to $300,000 to their super from the sale of their principal place of residence. This is available from July 1, 2018, but only if the property has been owned for a minimum of the last 10 years. These non-concessional contributions are in addition to what they are currently making under existing rules and caps and will be exempt from the age test, work test and the $1.6 million balance test. This is definitely something to spark interest amongst our retirement age community.
These are a few of the big points we noted from the budget release. We’d love to hear your thoughts below, or if you want to run some thoughts past one of us or have some questions about the budget, give us a call.