2018 Budget Update

2018 Budget Update

Buoyed by a stronger economy, the 2018 Federal Budget promises to deliver income tax relief, more jobs, guaranteed essential services and the government living within its means. So what does this mean for you?

 

Encouraging tax cuts
The centrepiece of the budget is income tax relief. There’s immediate relief for Australians on low to middle incomes, as well as light at the end of the tunnel for higher-income earners. Those earning up to $90,000 will get a tax cut of up to $530 via the introduction of a new, non-refundable Low and Middle Income Tax Offset from 1 July 2018. The offset will be available for the 2018-2019 to 2021-2022 income years and will be received as a lump sum on assessment after an individual lodges their tax return. The new offset is in addition to the existing Low Income Tax Offset. The new offset will provide a benefit of up to $200 for taxpayers with taxable income of $37,000 or less and for those with taxable incomes between $37,000 and $48,000 the value of the offset will increase at a rate of three cents per dollar to the maximum benefit of $530. Individuals with taxable incomes from $48,000 to $90,000 will be eligible for the maximum benefit of $530. For individuals with taxable income from $90,001 to $125,333 the offset will phase out at a rate of 1.5 cents per dollar.

Having raised it from $80,000 to $87,000 in 2017, the government is now bumping up the 37c on the dollar threshold to apply to taxable income greater than $90,000 from 1 July 2018. By 2024-25, that threshold will be eliminated and those earning $41,001 to $200,000 will face a top tax rate of no more than 32.5c in the dollar (plus the Medicare Levy), meaning Australians on high incomes will need to wait for relief.

Boomer benefits
As they have with every other life stage, the baby boomers look set to reinvent old age and how it is funded.

Older Australians who want to keep working can take advantage of the Pension Work Bonus being raised from $250 to $300 a fortnight, which will allow them to earn up to $7,800 per year without having their pension reduced.

The Pension Loan Scheme is also being expanded. This means many more retirees including full rate pensioners and self-funded retirees can boost their retirement income by up to $11,799 for singles and $17,787 for couples per year by borrowing against the equity they have in their home.

Older Australians wanting to stay in their own homes despite confronting medical challenges, can take advantage of the additional 14,000 high-level home care packages that have been provided. There’s also more money for palliative care and mental health services for those in residential aged care.

The Pharmaceutical Benefits Scheme has received a $1.4 billion boost to list more medicines including those to treat breast cancer and relapsing-remitting multiple sclerosis.

Super fees slashed
There’s not a lot in this Budget for younger Australians but they will at least get a better deal on their super.

Measures applicable from 1 July 2018 

To avoid unintentionally breaching the concessional contributions cap, individuals with income exceeding $263,157 from different employers can elect to have wages from certain employers not be subject to the Superannuation Guarantee.

Measures applicable from 1 July 2019

Administration and investment fees on accounts with balances under $6,000 will be capped at 3 per cent (of the balance). Exit fees will be banned, making it cheaper to switch super funds. The ATO will be supported to proactively consolidate any inactive super accounts a taxpayer has with their active account, where possible.

Rather than being the default option, life insurance will be offered on an opt-in basis for super fund members under the age of 25, those with account balances below $6,000, and those with inactive accounts with no contributions received in 13 months.

For individuals aged 65 to 74 with super account balances below $300,000, an exemption from the work test for voluntary contributions will be applied in the first year that they do not meet the work test requirements.

Cigs up, beer down, commutes quicker, power cheaper
In more bad news for smokers, the Government is cracking down on the sale of black-market tobacco. But Australia’s craft beer lovers may enjoy more affordable artisan ales following changes to the excise rate on small kegs.

The Government is funding infrastructure projects across the country. Among other benefits, this should result in safer, less congested roads. Australians will also benefit from the introduction of the national energy guarantee which is estimated to result in the power bill of an average household falling by $400 from 2020.

Counterfactual cost savings
Although these cost savings won’t affect the hip pocket, the measures are welcome news. The planned 0.5 per cent increase to the Medicare Levy to fund the NDIS has been scrapped. The franking credits cash refund remains. Negative gearing and the capital gains tax discount on investment properties and other investment assets have not been curbed. Furthermore, the government is funding its largesse through measures such as cracking down on welfare overpayments and targeting the black economy rather than jacking up taxes and levies on working Australians.

Having taken the GFC and end of the mining boom in its stride, Australia’s AAA-rated economy continues to power along. The Budget is even set to return to modest surplus in 2019-20 and, barring any unforeseen events, the Treasurer looks likely to achieve the goals he has set.

If you’d like more information on how the measures contained in the Budget will affect you, please give us a call.

 

McQueen Financial Group is a corporate authorised representative of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579.
This information is of a general nature only and does not take into account your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).

McQueen Group – Brisbane

McQueen Group – Brisbane

 

It has now been a year since we expanded into Brisbane, QLD. Given this milestone, it is timely that we provide you with an update on our activity in Brisbane and how we can help those located in South East Queensland.

 

What we are doing

Having the ability to see more people and start servicing the Brisbane area more proficiently is the goal for the remainder of 2018. Establishment of an office and foothold in an area when you are starting with a small base can often be hard, but we have made our way through the first year in great form and are now well situated at Level 11, Suite 1101, 110 Eagle Street, Brisbane.

The perks of having a small team in Brisbane, largely supported by the Melbourne office means we are very flexible and nimble. Our day to day interactions with clients are very adaptable, throughout South East Queensland we offer; home visits, meeting in cafes and anywhere else convenient for both parties. Ensuring that our clients receive a high-end, professional but personal feel when they interact with the Brisbane team.

 

Who we work with

We work with a broad range of clientele. In general, the types of clients that have been seeking us out for help fit into one of these four categories:

  • Young people establishing their financial pathway
  • Individuals and Families established financially and looking for the next steps to achieve their financial wellbeing
  • People approaching retirement and/or about to retire; and
  • People looking for investment management to invest their existing personal or superannuation funds.

Even if you feel like you don’t belong in one of the above four client groups, you can still get in touch for some guidance, as we are here to help!

 

The Brisbane team

Ben Warren is the Financial Adviser running the Brisbane team. Ben 5 years’ experience as a Financial Adviser and has dealt with clients of all ages and backgrounds. Ben can be found in his office or in any number of cafes dotted from Brisbane down to the Gold Coast.

To ensure you can always speak with someone from the McQueen Team when you need them, Ben is supported by the Melbourne office.

If you know anyone situated in South East Queensland that may benefit from some financial guidance or a second opinion, please contact Ben (07 3338 5780 / 0414 197 522) for an initial chat at our cost.

 

McQueen Financial Group is a corporate authorised representative of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579.
This information is of a general nature only and does not take into account your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).