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The taxing Federal Budget 2017-18

For some of us it’s a struggle to maintain our household budget; recording the outgoings and ingoings can be a laborious and tedious task. It’s a constant, everchanging battle with your family to get it just right. Charlotte wants piano lessons and Oliver wants a new bike, you’re struggling to pay the mortgage and you get a second job. It’s all very complex.

How about if you were treasurer of Australia? Scott Morrison must have been living his dream Tuesday night presenting the Federal Budget. A careful combination of creating a populist budget by taxing 0.06% here and 0.5% there with a surplus on the horizon for 2020-21.

Let’s have a look at some of the changes that may affect you:

First home buyers will be able to save for their housing deposit through their superannuation by making voluntary contributions. With a contribution capped at $15,000 per annum and a maximum of $30,000.

Foreign investors won’t be so happy though; they will need to grapple with paying more Capital Gains Tax as well as a new “ghost house tax” which can see properties that are left vacant for over 6 months charged at least $5,000. This may affect the housing market by slowing it down slightly in order to make it more affordable for first time buyers.

The Medicare levy is currently 2% and will increase by 0.5% to 2.5% of taxable income. This increase if passed by parliament will start in July 1st, 2019 and is designed to assist the National Disability Insurance Scheme (NDIS).

The big banks being the Commonwealth Bank, Westpac, ANZ, National Australia Bank and Macquarie Bank have been hit with a 0.06% levy; it doesn’t sound like much but this is estimated to boost the budget by $6.2 billion.

An extra $18.6 billion for education of Commonwealth funding over 10 years will go towards providing students with opportunities to access quality learning. This will assist school students but university students will see their fees being raised and paying an extra $2,000 to $3,600 for a four-year degree. Also, if you have an HECS debt you will need to start paying it off when your income reaches $42,000 rather than $55,000.

The cashless debit card for welfare recipients who fail to turn up to appointments or work-for-the-dole placements due to alcohol or drug abuse will confirm the government’s desire for a mutual obligation requirement from those on welfare. A drug testing trial will be applied to new welfare recipients. The new rules to deter dole bludgers and cheats aims to claw back more than $632 million from the welfare system.

For those who lost the benefit of having a pensioner concession card earlier in the year; you will be pleased to hear you can now get it back. Older Australian can also look forward to a $75 power rebate.

What about infrastructure? Sydney gets a second airport, Western Australia gets new roads and rail, Melbourne to Brisbane get connected with an inland rail link which will assist farmers to move their goods faster and cheaper and Queensland gets a significant amount to upgrade the Bruce Highway. The investment in infrastructure will create tens of thousands of jobs and cost about $75 billion over the next 10 years.

While we are not on the highest taxed countries in the world top ten list with Aruba leading the way and Austria in tenth place, it’s difficult not to feel the taxes creeping up and affecting our lifestyles. For more information as to how the Federal Budget makes a difference to your financial strategy please consult our financial advisers.

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