The Treasurer of Australia the Honourable Scott Morrison MP delivered his second budget on Tuesday 10 May 2017 which is directed to boost the economy and households.  The three key areas which the Government has decided to focus on are:

1. 1. Stronger growth to create more and better paying jobs.
2. 2. Guaranteeing the essentials.
3. 3. Living within our means.

Among the announcements made within the Budget papers, there were a few areas which may affect the salary packaging arrangements for employees.

MEDICARE LEVY

From 1 July 2019, the Medicare levy will be increased from 2.0% to 2.5%.  All revenue generated by the Medicare levy will be used to support the National Disability Insurance Scheme and to guarantee Medicare.  Low income earners will still be eligible to receive relief from the Medicare levy and the current exemptions still apply.

This change will have an impact on the FBT rate as this is linked to the top personal tax rate.  The following table outlines the FBT changes which will be effective from 1 April 2019.

HELP REPAYMENT THRESHOLDS

From 1 July 2018, the Government will be introducing a new set of repayment thresholds and rates under the High Education Loan Program.

Repayments will now occur at a rate of 1% at a new minimum threshold of $42,000.  The maximum repayment rate will be 10% at a threshold of $119,882.

SUPERANNUATION – FIRST HOME BUYERS

As part of the Government’s housing affordability measures, first home buyers will be able to make voluntary contributions into their superannuation fund to be used towards their deposit for their first home.

Individuals will be able to contribute a maximum of $15,000 per year and withdraw a maximum of $30,000.  The contributions can be made from 1 July 2017 and must be within the individuals existing contribution caps.

The withdrawal of these contributions and any earnings can be processed from 1 July 2018 and will be taxed at the individual’s marginal tax rate less a 30% tax offset.

Paywise will provide our members and clients additional information about Salary Packaging Superannuation for First Home Buyers to help gain home ownership when more specific information comes to light.
 

Disclaimer

This publication has been prepared without consideration of the particular investment objectives, financial situation and needs of the employer or individual employees. In all cases, employers should conduct their own investigation and analysis of the information contained in this publication. Paywise, each of its employees and every person involved in the preparation of this publication expressly disclaim all liability for any loss damage of whatsoever kind (whether foreseeable or not) which may arise from any person acting or relying any statements contained in this publication or for any information given by any salary consultant and notwithstanding any negligence, default of lack of due diligence and care. This disclaimer does not limit or alter those statutory rights, which cannot be excluded.