There was certainly plenty to talk about in the 2017/2018 Federal Budget proposal. It marked a fairly dramatic change in direction from recent years – with the aim of providing some stimulus for economic growth to help dig the nation out of its deficit hole by financial year 2020-21.
For the 50 plus age group, there were some welcome changes and some issues that may need attending to in relation to personal financial planning.
We have put together the summary below to give you a heads-up, but bear in mind that the budget measures are still just proposals and are subject to the passing of legislation. If you have any concerns about how you may be impacted, it would be wise to contact a financial planner to review your situation.
There were plenty of items of interest for pre-retirees and retirees in this year’s Federal Budget
Contribute the proceeds of downsizing to super
Many of us approaching retirement would prefer to downsize their home. The proposal will give retirees some welcome flexibility to downsize a home without compromising their overall retirement income situation.
From 1 July 2018, if you are over age 65 and sell your family home, you may have the opportunity to make a contribution of up to $300,000 to your super. You will not be required to meet the work test and the normal after-tax contribution limit will not apply. To qualify, you must have lived in the home as your main residence for at least ten years. If your home is owned jointly as a couple, each of you will be able to contribute up to $300,000 to your super.
Medicare Levy up but relief still applies
From 1 July 2019, the Medicare Levy will go up by half a per cent to help fund the National Disability Insurance Scheme and protect the Medicare system, but low-income earners will be happy to hear that relief measures and exemptions from the Levy will still be available.
Property investors be aware
From 1 July 2017, residential rental property investors will no longer be able to claim tax deductions for travel expenses related to inspecting, maintaining or collecting rent. Rules on depreciation deductions for plant and equipment are also being tightened up, but using a real estate agent to manage the rental will still be deductible.
Some wins for pensioners
To help relieve living costs for pensioners the Pensioner Concession Card will be reissued to those who lost it due to the asset test changes that came into effect on 1 January 2017.
There will also be a one-off Energy Assistance Payment in 2016/17 financial year of $75 for singles and $125 per couple for those who were entitled to the age pension on 20 June 2017 (as well as those receiving a range of other pension types).
New activity requirements for people receiving income support
From 20 September 2018, the following changes may affect you if you receive income support from the government:
- Recipients aged 55 to 59 will only be able to meet their participation requirements with 50 per cent volunteer activities. Currently 100 per cent of their participation requirements can be met via volunteering
- Recipients aged between 60 and Age Pension age are required to meet a 5 hours per week activity requirement, but this can be met through volunteering. Currently the activity requirement is 15 hours per week.
Aged care initiatives
Growing aged care needs are being addressed through a two year extension of funding for the Commonwealth Home Support Programme, which will take it through to 30 June 2020. This program assists people to stay in their own homes through a range of essential services, such as meals on wheels, personal care, cleaning, shopping, home maintenance, nursing and related health and respite services.
Funding has also been allocated to establish a taskforce led by the aged care industry to explore short, medium and longer term options for boosting supply in the aged care sector and limiting demand. One of the key issues that will be targeted is ensuring the supply of aged care workers is sustained, particularly in regional, rural, remote and outer suburban locations.
If you’re worried about any of the proposed changes in the Budget, you can arrange a complimentary, no obligation appointment with a Bridges financial planner.
What are you most pleased or concerned about in the budget? Share your thoughts below.
Image credit: Scott Morrison MP / Facebook
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This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this information, you should assess your own circumstances or seek advice from a financial planner and seek tax advice from a registered tax agent. Information is current at the date of issue and may change. WYZA Money is a partner of RFE Group Pty Ltd.