Federal Budget 2017: Snapshot

On Tuesday 9 May, the Federal Government handed down its Budget for the 2017–18 financial year.

According to Federal Treasurer Scott Morrison, this year’s Budget is founded on the principles of fairness, security and opportunity. Mr Morrison claims that the government’s proposed measures will raise almost $21 billion in revenue over the next four years, returning Australia’s budget to surplus by 2021.

Here are some of the key Budget announcements. Note that each of these proposals will only become law if it is passed by Parliament...

Read Budget Summary Here (Colonial First State)

Watch Budget Overview Here (MLC)

Read Budget Commentary Here (AMP)

Abandon gift in Will to keep pension?

The Financial Planner carefully structures Mary’s affairs.

Mary receives a $1 pension and Concession Card. But then, Mary’s mother dies.

Mum’s Will leaves everything to Mary. The inheritance costs Mary her $1 pension and Concession Card. Mary has money from her superannuation. She doesn’t want the inheritance. Mary desperately renounces the gifts under the Will. Mary’s children get the inheritance instead.

Does Mary keep her Centrelink Benefits?

Sadly, no. Centrelink deems monies abandoned or given away still yours for the next five years.

The two exceptions:

1. $10,000 rule – gifts under $10,000 per year are not means tested
2. $30,000 rule – gifts under $30,000 over a five-year period are within the gifting free area. However, a gift cannot exceed $10,000 in any year.

Gifts above $10,000 are ‘deprived assets’. ‘Deprived assets’ are given away but still deemed yours for the next five years. Sure, Mary can abandon the gifts under her Mum’s Will. However, Centrelink deems the gifts still hers for the next five years.

So what can you do?

Let’s pretend Mary’s mother is still alive. There are many strategies available to them. For example, an Accountant or Financial Planner can go on a legal website (we recommend Legal Consolidated - www.legalconsolidated.com.au) and easily build a 3-Generation Testamentary Trust Will.

The 3-Generation Testamentary Trust Will names Mary and her children as beneficiaries. The 3-Generation Testamentary Trust is flexible. Each beneficiary can receive a portion or none of the estate.

Mary then successfully retains her $1 pension and all-important Concession Card.

Companies and Family Trusts would require a slightly different approach.

Rick Maggi

Scams: Be Aware

More than 105,000 scams were reported to the Australian Competition and Consumer Commission (ACCC) last year, resulting in losses of more than $84 million. And that's just the tip of the iceberg: many more scams went unreported, often because the victim was too embarrassed to tell authorities about the crime.

To help combat the increasing number of scams, Macquarie Bank have compiled a list of the 12 most common ones they've come across.

See the list here

2016/17 Federal Budget

As usual, the pre-Budget fears and scaremongering turned out to be largely unwarranted. With a significant focus on superannuation, last night's Federal Budget was in many ways a relief to the majority of Australians with superannuation and pensions. In fact, there were a number of positive proposals put forward like the removal not the work test and the reintroduction of tax deductible personal super contributions (up to $25,000). 2016-2017 Federal Budget Summary

For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.