Budget 2016-17: Let's break it down
04/05/2016 Shane Light, Head of Advice
What did you get up to last night? Dinner on the couch? Bath the kids? Bit of Masterchef on the television? Not for the finance die-hards at The Hopkins Group.
As the clock ticked over to 7.30pm last night, our team of committed finance enthusiasts was busily preparing to watch, take notes and analyse the potential impacts of the Liberal Government’s budget for 2016-17. Of most interest were the proposed changes that could impact our clients and their wealth management strategies.
The hype and sensationalised media that we have endured over the past couple of weeks was soon to be realised.
As discussed in our recent roundtable discussion, negative gearing has been hot on the agenda but the Liberal Government chose to leave it untouched in next year’s budget. What they have done though – and of most concern to our clients – is to introduce significant changes to superannuation caps. This will mean clients will become restricted in the way in which they can build wealth within the superannuation environment.
To keep this short and sweet – as we assume your inbox has been flooded with other post budget debriefs – we have provided a list of key superannuation and taxation issues that were addressed in last night's announcement.
The proposed effective date for all is set at 1 July 2017 for all but one key change; the lifetime cap for non- concessional superannuation contributions came into effect at 7.30 pm (AEST) 3 May 2016.
Superannuation
- Contribution caps
- Concessional (reduction in caps)
- Non-Concessional (life time limits introduced)
- Catch-up concessional contributions
- Tax deduction for super contributions extended
- Super contributions tax - high income earners
- Removal of work test
- Removal of the maximum earnings test
- Retirement income balance cap of $1.6m
- Transition to retirement
- Low Income superannuation tax offset (LISTO)
- Low Income tax offset spouse threshold
- Anti-detriment
Taxation
Business
- Company tax cut
- Small business tax discount increase and extension
- Small business entity turnover threshold increase
- Small business $20,000 instant asset tax write-off extended
- Simpler Business Activity Statements (BAS)
- Targeted amendments to Division 7A
Personal
- Change to income tax thresholds
- Increased Medicare low income thresholds
- Medicare levy income threshold and rebate pause extended
- Childcare subsidy delayed
- Reversal of decision to remove backdating of veterans’ disability pension claims
- HECS
There's so much detail within each of these points and we encourage you to book in with your adviser on 1300 726 082 to discuss how your personal circumstances could be affected - especially in relation to wealth creation.
What's your next move?
In the meantime, an easy way to get your head around the budget and what it means in the grand scheme of things, is to register for #ECON16, our annual economic briefing on Thursday 19 May at ACMI, Federation Square. Scott Fletcher, Director - Client Investment Strategies, Russell Investments will be our keynote speaker on the night and we look forward to hearing his response to Budget 2016-17.
Further reading
John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL:326450.
General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.
Any tax advice provided in this document is incidental to the financial advice provided, being unaware of, nor able to consider all aspects of your tax affairs. You should consult your own tax professional to confirm any tax advice provided is appropriate with regards to your total tax planning needs.
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