Last night, the Budget for 2017-18 was announced by Treasurer Scott Morrison, unveiling a new plan to boost infrastructure spend, invest in education and improve housing affordability.
A new First Homeowners Supersavers Scheme will now allow first home buyers to use up to $30,000 of voluntary pre-tax superannuation contributions (salary sacrifice) towards a deposit for their first home or apartment.
A maximum of $15,000 can be contributed towards the First Homeowners Supersavers scheme in any one year. These contributions and earnings are taxed at a rate of 15%, like all other super contributions. Withdrawals are taxed at the employee’s marginal rate minus 30%. As most employees in this category are on a 30% marginal tax, this will effectively be tax free.
Employees will be able to withdraw a maximum of $30,000 of contributions, plus earnings from 1 July 2018. First home buyers can start making contributions from 1 July 2017.
From 1 July 2019, the Medicare levy will increase from 2% to 2.5% for singles earning over $21,655 and from $36,541 for families.
High-income tax payers earning more than $180,000 will cease paying the 2% Temporary Budget Repair levy as of the 1st July 2017.
The Government has made no changes in this year’s Budget to extend the Temporary Budget Repair levy. Therefore, excluding the impact of the Medicare levy, from 1 July 2017, the top marginal income tax rate will be 45 per cent. The increase in the Medicare Levy by 0.5% in 2019 will result in an effective tax cut of 1.5%.
The Treasurer indicated that the increase will be used to fund the National Disability Insurance Scheme (NDIS).
HELP STUDENT DEBT
The Budget also brings increases to university fees, with students forking out an extra $2,000 to $3,600 for a 4 year course.
The threshold determining when an employee is required to repay their HELP student debt will also change from 1st July 2018. Currently HELP debt is repaid when the earner earns over $55,000, this will be reduced to $42,000 from July 2018.
More information on the budget:
Budget 2017-18 website >