What the 2017/18 Federal Budget means to property

Editorial Team • October 26, 2017
image of a glass piggy bank with a green house inside it

There’s no denying property was a hot topic for the 2017/18 Federal Budget. There are a number of new measures that will have an impact on current and future property investment structures.

From first home buyer savings to what investors can claim at tax time, here are some key changes to note if you’re in the property market.

First home buyers

From July 1, 2017, first home buyers will have the option of using up to $30,000 of voluntary superannuation contributions to place a deposit on a property. The measure, which is aimed at helping young people crack the property market, is expected to cost the federal government $250 million over the next four years.
First home buyers will be allowed to withdraw any contributions beyond the current 9.5% super guarantee to buy property. The maximum withdrawal amount is $30,000 effective from July 1 2018, and contributions can be made from July 1, 2017.

Travel expenses

Tax deductions relating to expenses incurred while visiting properties will be completely scrapped. Previously, investors could claim travel costs when visiting an investment property, with no limit on the number of visits per year.

Foreign investors

Tougher rules will be implemented in an effort to tighten compliance around foreign investing. This includes a move to ban developers from selling more than 50 per cent of a new project to foreign investors.

Under the new Budget, foreign investors will also be hit by a new $5,000 annual levy if their property is left vacant for more than six months.

There are also new rules surrounding foreign investment and capital gains tax. From July 1, foreign and temporary tax residents will no longer be exempt from a capital gains tax when selling their main residence in Australia. It’s important to note that existing properties held prior to this date will be grandfathered until June 30, 2019. Moreover, foreign investors will now pay a 12.5% capital gains withholding tax when they sell their property, up from 10%.

Interest rate hike

Australia’s big four banks will be slapped with a new tax on the majority of their funding. Starting from July 1, a 0.06 per cent annual levy will be added to certain key funding sources. This measure will only affect banks with liabilities over $100 billion, including Commonwealth Bank, Westpac, National Australia Bank, ANZ and Macquarie.

This new bank levy means homeowners and property investors could feel the pinch, with a potential interest rate increase on the cards.

Depreciation limitations

There will be a tightening of depreciation deductions for investment properties. Investors of negatively geared properties will be unable to claim depreciation deductions on items such as dishwashers, washing machines and ceiling fans.

The federal government will also introduce a plan to no longer allow subsequent owners of a property to claim deductions on items purchased by the previous owners of the property.

Incentivised to downsize

Australians over the age of 65 will be incentivised to downsize. From 1 July 2018, those over 65 who sell their residential property of a decade or more will be able to put up to $300,000 in sale proceeds into their superannuation.

 

For more on the advice we have for your property interests, view our Services.

ATO take “Gloves off” on overseas income

By Editorial Team • September 6, 2019
How you are taxed and what you are taxed on depends on your residency status for tax purposes. As tax residency can be different to your general residency status it’s important to seek clarification. The residency tests don’t necessarily work on ‘common sense.’ For tax purposes: Australian resident – taxed on worldwide income including money earned overseas (such as employment […] The post ATO take “Gloves off” on overseas income appeared first on BDH Leaders.

Tax Time: Are you in the ATO’s sights?

By Editorial Team • June 16, 2019
What’s new Live reporting through Single touch payroll Single touch payroll (STP) reporting has changed the way businesses report salary and wages, PAYG withholding and superannuation contribution information to the ATO. For the 2018-19 financial year, only businesses with 20 or more employees were required to use STP. From 1 July 2019, all businesses will need to use STP although […] The post Tax Time: Are you in the ATO’s sights? appeared first on BDH Leaders.

What you can expect after the Election

By Editorial Team • May 3, 2019
Budget 2019-20: The pre-election announcements that are now law The Federal Budget announced a series of measures, some of which were legislated before the election was called. Extension and increase to the instant asset write-off The popular instant asset write-off for small business has been extended and increased. The new laws: increase the threshold below which small business entities can […] The post What you can expect after the Election appeared first on BDH Leaders.

Borrowing in the post Banking Royal Commission era

By Editorial Team • December 17, 2018
The fallout from the Banking Royal Commission is reverberating across the economy. Banks are simplifying their business models, cutting costs and tightening their lending practices. Boards are streamlining their product offerings in the wake of some pretty astounding findings by the Commission. The impact of the Banking Royal Commission is not only being felt by banks. The property markets continue […] The post Borrowing in the post Banking Royal Commission era appeared first on BDH Leaders.

Is a Limited Recourse Borrowing Arrangement right for my SMSF?

By Editorial Team • December 17, 2018
We borrow all the time to acquire assets; you may borrow to purchase a home or investment property which usually involves a mortgage, you may borrow from a finance company for a car which uses the car as collateral, you may take out a margin loan to purchase equities. These are just some examples but there is another: Limited Recourse […] The post Is a Limited Recourse Borrowing Arrangement right for my SMSF? appeared first on BDH Leaders.

Building wealth with stocks, bonds and funds

By Editorial Team • August 21, 2018
Investing in revenue-producing assets can be confusing. There is a lot of financial jargon to wade through and it’s often not easy to decide which asset best suits your needs and financial goals. In this article we will simplify stocks, bonds and funds. Stocks Stock (equity) is when you purchase shares in a company. The price of a share, purchased […] The post Building wealth with stocks, bonds and funds appeared first on BDH Leaders.

The rise and rise of investing ethically

By Editorial Team • August 21, 2018
Making an investment decision is not always based on the possible return you may receive from that investment. An increasing number of people are basing their choice of fund, or company, on issues around social responsibility, sustainability and corporate governance. In Australia, ethical investing started in earnest in 1986 with the launch of Australian Ethical, followed in 1994 by Hunter […] The post The rise and rise of investing ethically appeared first on BDH Leaders.

Let me be Frank

By Editorial Team • August 21, 2018
What is a Franking Credit? You have probably seen this phrase on tax statements provided to you by a company you invest in but what does it actually mean? Franking Credits are the means whereby Australian companies can give credit for tax paid at the company level to their shareholders, which can then be used by the shareholder to avoid […] The post Let me be Frank appeared first on BDH Leaders.

IPOs vs ICOs – what’s right for you?

By Editorial Team • August 21, 2018
There are significant differences between an initial public offering (IPO) and an initial coin offering (ICO) and before you invest in either option, it is important to understand those differences and the risks associated with each. What is an IPO An IPO is the first sale of a company’s stock issued to the public via a stock exchange, usually to […] The post IPOs vs ICOs – what’s right for you? appeared first on BDH Leaders.

Is your business about to have a growth spurt (and are you ready)?

By Editorial Team • August 21, 2018
Besides the launch phase, growth spurts are the second riskiest time for many businesses. An unexpectedly successful marketing campaign, a sudden change in consumer needs, a ‘hot’ market for a particular type of product or service – any of these things can cause challenges for your business. The question is – will your business cope?   Consider the following points […] The post Is your business about to have a growth spurt (and are you ready)? appeared first on BDH Leaders.
More Posts