I thought I would just summarise some areas of relevance to our industry in the 2017 Federal Budget that has just been announced by the Treasurer, Scott Morrison:
Breaks for first home buyers
From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total, to their superannuation account to purchase a first home. These contributions, which are taxed at 15 per cent, along with deemed earnings, can be withdrawn for a deposit. Withdrawals will be taxed at marginal tax rates less a 30 per cent offset and allowed from 1 July 2018.
For most people, the First Home Super Saver Scheme could boost the savings they can put towards a deposit by at least 30 per cent when compared with saving through a standard deposit account, however, it will be interesting to see the real impact this will have on first home buyers especially in Sydney and Melbourne where median house prices have risen steeply.
(In Sydney, only 4.1% of all the suburbs in the city have a current median house value of $500,000 or less and 19.7% of suburbs have a median unit value of $500,000 or less. With a budget up to $500,000 potential purchasers in Melbourne will have access to 18.7% of suburbs for houses and 50.1% of suburbs for units).
Older Australians will be encouraged to downsize and free up housing stock. From 1 July 2018, people aged 65 and older will be able to make a non-concessional contribution of up to $300,000 to their superannuation after selling their home. This will be in addition to any other contributions they are eligible to make.
Investors and Negative Gearing
Investors should get a small confidence boost as negative gearing remains and only some small rules have been tightened around what can be claimed (specifically travel expenses related to inspecting, maintaining or collecting rent for a residential rental property) and some depreciation deductions.
Impact on Banks
Big banks will be hit with a levy on liabilities of $100 million or more from July 1, to reap $6.2 billion for the government over the next four years.
This will only affect the five biggest banks — the Commonwealth Bank, Westpac, National Australia Bank, ANZ and Macquarie; however, given Australia’s relatively concentrated banking sector, dominated by the big four, some of these costs could be passed on to customers, who may then turn to their smaller competitors.
Ghost house tax will be imposed on foreign investors who leave properties vacant
To discourage foreign investors from buying residential properties and leaving these vacant, the Government will now charge foreign owners of residential properties an annual charge of at least $5,000 per year if the property is not occupied or available to rent for at least six months in each year.
Record levels of spending on infrastructure
The budget also included details on the funding ($5.3 billion) of the second Sydney airport. This should create 20,000 jobs over the 8-year construction period. Transport and infrastructure feature strongly in the budget, with funding provided for an inland rail link from Melbourne to Brisbane.
Please note the above are proposals as part of the Federal budget and are subject to the passing of legislation.
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