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Taxes, levies and health care - key points from the 2017 Budget

Here we cut through the dozens of announcements from the Budget papers to bring you some of the key points on taxes, levies and health care.

Tax changes

Some of the big ticket items that were in the media leading up to Budget Night and could potentially impact individuals were not significantly addressed. There were no plans announced to change existing rate of GST, and there were only minor proposals related to negative gearing deductions and capital gains tax discount.

Making housing more affordable

There were a number of other tax measures aimed at reducing pressure on housing affordability.

Negative gearing

  • From 1 July 2017, the Government will not allow deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property. This is an integrity measure to address concerns that many taxpayers have been claiming travel deductions without correctly apportioning costs, or have claimed travel costs that were for private travel purposes.

Capital Gains Tax (CGT) Discount

  • From 1 January 2018, there’ll be an additional ten percentage points capital gains tax discount, increasing the discount from 50% to 60%, to resident individuals who elect to invest in qualifying affordable housing.
  • To qualify for the higher discount, housing must be provided to low to moderate income tenants, with rent charged at a discount below the private rental market rate. The affordable housing must be managed through a registered community housing provider and the investment held for a minimum period of three years.

Paying more in Medicare levies

From 1 July 2019 the Medicare levy will increase by half a percentage point from 2% to 2.5% of taxable income in order to ensure the National Disability Insurance Scheme can be fully funded.

Medicare levy threshold increases for low income earners

From the 2016-17 financial year the Medicare levy thresholds will increase to $21,655 for singles and to $36,541 for couples with no children, plus $3,356 for each dependent child or student.

For single seniors and pensioners, the threshold will be increased to $34,244. For senior and pensioner couples with no children, the threshold will be increased to $47,670 and the additional amount of threshold for each dependent child or student will be increased to $3,356.

Small businesses continue to benefit

The $20,000 instant asset write-off for small businesses with turnover of less than $10 million will be extended by 12 months to 30 June 2018.

Assets valued at $20,000 or more can continue to be depreciated at 15% in the first income year and 30% each income year after that, until the balance is less than $20,000 when it can be deducted immediately.

Medicare will be guaranteed

The Government is guaranteeing Medicare. The Medicare Guarantee Fund will be established from 1 July 2017, to secure the ongoing funding of the Medicare Benefits Schedule (MBS) and the Pharmaceutical Benefits Scheme (PBS), guaranteeing Australians’ access to these services and affordable medicines in future. Going to see a doctor will generally get cheaper as the Government lifts the freeze on Medicare rebates.

  • To encourage GPs to bulk bill children under the age of 16 and concession card holders, bulk billing incentives will be indexed from 1 July 2017
  • Standard consultations by GPs and specialist attendances will be indexed from 1 July 2018
  • Specialist procedures and allied health services will be indexed from 1 July 2019. 

Understanding the changes

There were many things announced in the 2017 Federal Budget. It’s important to see a financial planner to understand what these changes mean for you. Just call 1800 620 305 for an obligation-free appointment with a StatePlus planner.

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