Budget 2017/18: salary packaging to help first home buyers

Budget 2017-18_social

Treasurer Scott Morrison delivered his second federal budget on Tuesday 9 May, including a key measure aimed at tackling housing affordability for first home buyers.

From 1 July 2017, first home buyers will be allowed to make salary-sacrifice contributions to their superannuation fund that, along with the related earnings, can be withdrawn for a first home deposit. Significantly, both members of a couple can take advantage of this measure and combine savings for a single deposit to buy their first home together.

As part of the proposal, salary-sacrifice contributions will be taxed as per current super contributions and withdrawals taxed at the marginal rate, less 30% offset.

Combined with the existing concessional tax treatment of contributions and earnings, this may reduce the time it takes for first home buyers to save a deposit.

Other key points to note:

  • Contributions will be capped at $30,000 per person, and $15,000 a year (within the existing $25,000 concessional super cap)
  • Contributions can be made from 1 July 2017, and withdrawals from 1 July 2018.

Changes to the Medicare Levy

Another notable change that will impact salary packaging is the proposed increase in the Medicare Levy from 2% to 2.5% to ensure the full funding of the National Disability Insurance Scheme (NDIS).  Effective 1 April 2019, this is likely to lead to an increase in the FBT rate, expected to apply from 1 April 2020. For PBI employers, this may also impact the $17,000/$30,000 tax-free caps and the $5,000 Meal Entertainment cap.

Changes to HECs debt repayment

Also influencing salary packaging is a proposal that will see the income level at which HECS debt repayments commence reduced from $55,000 (including reportable fringe benefits and salary packaged superannuation) to $42,000, effective 1 July 2019.

We will be in touch with our valued customers to ensure that they understand the changes and how they may be affected by them.


Deven Billimoria
Chief Executive Officer
Smartgroup

Share this blog

Bookmark and Share
May 2017
M T W T F S S
« Dec   Jun »
1234567
891011121314
15161718192021
22232425262728
293031  

Enter your email address to subscribe to this blog and receive notifications of new posts by email.


%d bloggers like this: