The Federal Treasurer, the Hon. Scott Morrison MP, delivered his third Federal Budget on 8 May 2018. This is the last budget that will be delivered before the next Federal election.
There are some positive big picture items, good news for small business and lots of good news for retirees and those in Aged Care.
Here are my top 10 items of interest in the May 2018 budget:
- No wholesale tax reform, which is needed, however this was never going to happen with a budget going into an election year.
- Stronger revenue windfall means a promised return to surplus a year earlier, and the deficits in the near term are smaller.
- Personal income tax reduction through the increase of thresholds, although most of these reductions are in the future and proposed for 1 July 2022. However, next financial year from 1 July 2018 the threshold where you start to pay 32.5% of your income as tax will be increased from $87,000 to $90,000.
- If you have a SMSF you were restricted to just four members you can now have six, potentially opening the opportunity to include more of your family in your SMSF.
- For those close to or just retired. You can now contribute into super the year after you stop working not just the year you work but only if you have less than $300,000 in Super – a small increase in flexibility.
- For small business, the Treasurer announced an extension of the A$20,000 instant asset write-off for another year, allowing businesses with turnover of up to A$10 million a year to claim an immediate deduction for a purchase of below A$20,000. The write-off had been due to reduce to A$1000.
- Expense deductions when holding vacant land will cease to be deductible from 1 July 2019.
- In Aged care, the Government continues to promote more choice through the Ageing in Place initiatives by providing additional funding to improve aged care access with more home care packages and residential aged care places
- The relatively unknown Federal Pension Loan Scheme has been extended to full rate pensioners and self-funded retirees. This scheme offers a reverse mortgage at 5.25% to all Australians of Age Pension age by allowing them to improve their income in retirement by unlocking the equity in their home. The Government’s extension of the scheme to full rate pensioners and self-funded retirees, means they can boost their retirement income by up to $17,800 for a couple, without impacting on their eligibility for the pension or other benefits.
- No immediate changes to the company tax rates where big companies (greater than $50 million Turnover) still pay 30% and those under pay 27.5%. The plan remains the same for all companies to move to a 27% tax on 1 July 2024.