2017 Federal Budget Update
The Australian Federal Budget for 2017-2018 was delivered on 9 May 2017.
Reaction to the budget have been mixed with many claiming that it has broad voter appeal and positions the government for an early election. The Treasurer remains optimistic that Australia will continue its slow economic recovery. Some surveys indicate that over 50% of people believe they will be worse off as a result of the budget.
There are few major changes to the taxation and superannuation system, which comes as welcome relief after last years tumultuous changes to superannuation.
The Government is increasing its revenue take through two significant taxation changes – increasing the Medicare Levy to 2.5% from 1 July 2018 and a levy on major banks. Together these two revenue measures bring in $14.4 billion in revenue over the forward estimate periods, with the Government allocating the $8.2 billion from the Medicare Levy increases to funding the National Disability Insurance Scheme. The revenue measures are complimented by major savings in higher education, better targeting of assistance to families and job-seekers and improving access to cheaper medicines.
On the expense side of the Budget, the Government have committed to major spending on school funding, a Skilling Australians Fund supporting ongoing jobs training, new medicine listings on the Pharmaceutical Benefits Scheme, supporting the Medicare scheme and extending the immediate deductibility rules for small businesses.
As expected, housing affordability is a centrepiece of the 2017-18 Budget, with a raft of measures introduced to improve affordability. However, while some tax deductions related to housing investment have been trimmed, negative gearing and the capital gains tax discount have gone largely untouched.
The major talking point has centered upon the bank levy which appears to be fully supported by Labor. The banks have indicated already that they will not be absorbing this cost.
The key changes affecting small business include the extension of the immediate deduction for plant and equipment costing less than $20,000 until 30 June 2018, and a tightening of the small business CGT concession.
Chartered Accountants Australia and New Zealand have produced this info-graphic summarising the key budget figures:
Pretium Solutions Budget Summaries
We have produced two budget summaries which contain more detail on the budget measures.
It is important to remember that none of the measures announced in the budget actually take effect until the legislation is passed by both houses of parliament.
Tax and Accounting Budget Summary Get your copy of Tax and Accounting Budget Summary
Political and Economic Budget Summary Get your copy of Political and Economic Budget Summary