Australia Budget Summary 2017
Most taxpayers will soon be paying more tax.
The Medicare Levy is set to increase by 0.5 percentage points — from 2 to 2.5 per cent of taxable income — to help fund the $22 billion National Disability Insurance Scheme (NDIS) and avoid future budget black holes.
If it’s passed by Parliament, the change will kick in on July 1, 2019.
The Treasurer says all Australians have a role to play in supporting the disability scheme, even if they aren’t directly affected.
There’ll be more Commonwealth funding per student for most schools. The Federal Government will give schools an extra $18.6 billion over 10 years.
The Government says it will standardise school funding, but as part of that about two dozen schools will lose Commonwealth funding and about 300 more won’t receive as much as they expected.
University Students: Loser
University fees are on the rise. Students will have to pay an extra $2,000 to $3,600 for a four-year course. That’s a fee increase of 1.8 per cent next year, and 7.5 per cent by 2022.
The income level at which you will have to start repaying your HECS debt will also be reduced. Currently, you only have to repay your debt when you earn over $55,000. From July next year, you’ll have to repay it once you hit $42,000.
Universities are also facing a 2.5 per cent efficiency dividend.
The only win for university students is the introduction of Commonwealth Supported Places in sub-bachelor programs like diplomas.
People who use roll-your-own tobacco or smoke cigars might feel some pain after the budget.
Those products are set to be taxed more, bringing them into line with the tax rates on cigarettes.
The change will be phased in over the next four years, and will contribute $360 million to the budget over the same period.
First Home Buyers: Winner
First home buyers are modest winners in this budget.
They’ll be able to use voluntary contributions to their superannuation to save for a house deposit. Withdrawals will be taxed at a lower rate, but the amount you can contribute is capped at $15,000 a year and $30,000 all up. Both members of a couple can take advantage of the scheme.
The new restrictions on foreign property owners (see Losers: foreigners) could take a little heat out of property prices in the east coast capitals, which would benefit first home buyers.
Pharmaceutical Consumers: Winner
The Government has struck a deal with Medicines Australia to reduce the price of certain pharmaceuticals.
This means your out-of-pocket expenses for certain medicines will be lower.
Extra medicines to treat heart conditions and schizophrenia have been added to the Pharmaceutical Benefits Scheme
Small business owners: Neutral
The owners of small businesses will enjoy instant tax offsets for another year; a measure the Treasurer says will improve cash flow. Businesses that turn over less than $10 million each year will be able to immediately write off expenditure up to $20,000.
That’s flagged to revert back to $1,000 from July 1, 2018, but there’s a possibility it could be extended again.
However, some small businesses may also be hit with a new foreign worker levy.
Every employee on a temporary work visa will cost a business up to $1,800 each year, while businesses will pay a one-off levy for workers on a permanent skilled visa.
Foreigners are losing out when it comes to visas, employment, property and education.
Under the new Temporary Skills Shortage visa employers will have to pay a levy of up to $5,000 for each foreign worker they employ. The levy will be put towards a fund to train Australian apprentices and trainees.
Foreign investors are being slugged with an extra charge for properties left vacant — and there’ll be an increase in their application fees.
Foreign property owners are also being stung on their main residence; they’ll now have to pay the capital gains tax when they sell it. And foreign ownership of new developments will be capped at 50 per cent.
Australian permanent residents and most New Zealand citizens will no longer be able to apply for Commonwealth supported university places.
The only win for foreigners is the establishment of a temporary sponsored parent visa which will allow relatives to stay in Australia for up to 10 years.
For more information contact SSK Accountants @ 03 8759 0629.