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)

WILL THE SUPER REFORMS HURT?

From 1 July 2017, a range of super reforms announced in the 2016 Federal Budget will take effect.

For most people, the impact of these changes will be positive or neutral.

Super remains a very attractive place to save for retirement. And there may be opportunities to grow your super and retire with more.

If your income is below $250,000 (for 2017/18), while you build up your super, pre-tax contributions and investment earnings will generally continue to be taxed at the low rate of up to a maximum of 15%, not your marginal tax rate of up to 49%. 

Also, when you retire, you can still transfer a generous amount into a superannuation pension, where no tax is paid on investment earnings and payments are generally tax-free at age 60 and over.

Next steps...

Once you have read through this guide, you should consider making an appointment with your financial adviser. They can assess the impact the super reforms could have for you, as well as review your retirement savings plans and the strategies you are using. 

Beyond that, as we head towards the end of another financial year, now is a great time to see if there is anything else you could be doing to tax-effectively build and protect your wealth.

If you don’t have an adviser, you call us (Westmount Financial) on 9382 8885 to arrange an appointment. 

View a basic, 'at a glance' guide here.

Rick Maggi

$500k Lifetime Limit Scrapped

The Government today announced major changes to the superannuation package contained in the 2016 budget, including scrapping the backdated, lifetime cap of $500,000 on non-concessional contributions (NCCs). However, anyone with over $1.6 million in super will not be allowed to make further NCCs. Today’s announcement includes several other changes.

The full announcement by the Government is attached here.

The announcement does not change the lowering of the concessional contribution to $25,000, and with the reduction in NCCs from $180,000 a year to $100,000, weaker flows into superannuation than in the past can be expected. It’s likely to hit SMSF inflows harder, since these are generally used by wealthier investors who can afford the extra contributions.

Read a full summary of the superannuation package 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.

Budget SPECULATION RIFE

There will be added interest in the Federal Budget announcement next week (May 3rd) as it's likely to be the final major economic statement the Government makes before the election later this year, quite possibly July 2nd. With the opposition taking a strong stance on capital gains tax and negative gearing, we're looking at a focus this year on taxation. Corporate tax could be cut by up to 1.5% however, there is likely to be minimal, if any, relief in terms of personal income tax.

There may also be some changes to superannuation. Some potential changes might be reduced contribution caps, the concessional 15% tax on super contributions, an end to 'Transition to Retirement' pensions and taxes on superannuation pension payments.

Overall, the outlook is for minimal growth in government spending, with spending offset by savings elsewhere in the Budget.

Where sharemarkets are concerned, historically we have seen some sideways tracking in past election years, but there has been no evidence to date of a lasting impact caused by an election. In fact, Australian economic growth has actually been strong during election years since 1980.

We'll be watching the announcements closely next week and will keep our clients informed of any meaningful developments.

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

11/02/16: IS THIS A BEAR MARKET?

Fear of fear itself or something more fundamental?

AMP Capital's Dr Shane Oliver weighs in on the market meltdown and asks the tough questions. A must for retirees and investors looking for a calmer, mature assessment of the current climate. Read Here

01/01/16: Here's to You...

When we look back at the things that helped make 2015 a great year, our warmest and fuzziest feelings come when we think of you, our client.

So thank you for choosing Westmount. Here's to another prosperous, healthy, exciting year full of possibilities!

The Westmount Team

19/11/15: US interest rates: Fear or celebrate?

5 reasons not to be too worried about 'The Fed'

In this article, AMP Capital's Dr Shane Oliver discusses what is on everyone's mind lately, the strong possibility of an interest rate hike in December. Is this something that should be feared or celebrated? Read more here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

01/09/15: Interest rates on hold

But for how much longer?

The Reserve bank board met on Tuesday 1 September and kept official interest rates on hold at 2%, continuing to assess the impact of the two rate cuts earlier in the year.

Lack of business investment No doubt the RBA board would have discussed at length current weak commodity prices impacting our national income, the lack of business investment as well as two key developments that arose earlier in August. These include the recent devaluation of the Chinese currency and the weak Australian unemployment report.

Unemployment rate Previous RBA commentary indicated it considered the unemployment rate profile was around 6%. However the other key development in August was that the unemployment rate jumped to 6.3%. A higher unemployment rate is also a catalyst for an inflation downgrade, due to weak wages growth.

Business conditions and confidence The NAB business confidence survey for August pared back the post Budget gains, however both conditions and confidence are suggesting a turnaround in the non-mining economy, with conditions varying greatly across industries. The confidence index is still positive and holding around average levels.

Macquarie Bank is of the view that the combination of the Chinese currency devaluation, a weakening labour market and excess capacity in the economy all support the case for a further rate cut in November. The next RBA board meeting will be held on Tuesday 6 October.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

28/08/15: Busting the bond myth

Rate expectations...

The decline in interest rates to historic lows in recent years has led to anxiety among Australian investors about what will happen to their fixed interest holdings when overnight interest rates begin to rise.

This apprehension is based on the conventional view that longer-dated bonds underperform in this type of rising interest rate environment.

Dr Steve Garth provides another perspective in Cuffelinks.

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

18/06/15: Tax concessions and tax reform in Australia

A well balanced commentary...

As house prices rise and/or when economic activity slows, the inevitably cries for tax reform can be heard from both sides of politics. This note focuses on the debate around the four major "tax concessions" in Australia - negative gearing, capital gains tax discounts, dividend imputation and, of course, superannuation. Read more here

Rick Maggi Westmount Financial Clear Focus. Better Solutions.

30/10/14: Punchbowl removed: The end of 'Quantitative Easing'

End of an era… After a year long phasing down period, last night the US Federal Reserve finally ended its quantitative easing (QE) program, introduced at the height of the Global Financial Crisis back in 2008.

Since the worst days of the GFC, unemployment has fallen, consumers are spending again, businesses are investing and banks are lending. So after all is said and done, QE seems to have actually worked - the US economy is now well and truly into expansion mode and looking a lot stronger than Europe and Japan that have taken longer to adopt QE.

It would be fair to say that, while the US economy isn't exactly booming, the Fed Reserve's decision to take the economy off life-support was, at least for now, an important sign that the US may now be able to finally stand on its own two feet.

While the punch-bowl may have been removed from the table, the music continues to play. Consistent with the Fed Reserve's softly, softly approach, they've also indicated that interest rates won't be going up in a hurry, even as the US economy continues to recover - an encouraging signal to the US (and the rest of the world) that concrete evidence of a sustainable recovery will be needed before interest rates are finally raised in earnest.

The ending of US QE is also a positive for Australia and removes a source of upwards pressure on the Australian dollar (great for exporters).

Rick Maggi Westmount I Financial Solutions

19/02/14: Age Pension Bonus: Last chance to register

Move quickly, deadline approaching!

If you're still working, male, and you were aged 65 or over (or 63.5 or over if you're a female) before September 2009, then you need to read this article.

If you fall into this age group and you expect to receive the Age Pension when you do finally retire, then you need to be aware that the Pension Bonus Scheme (PBS) closed to new members from 20 September 2009. Assuming you fall into this specific age group, the good news is that you can still register for the Age Pension Bonus, but you will have to hurry because applications close 28 February 2014.

Background: The PBS is a scheme to encourage older Australians to defer taking the Age Pension. The scheme pays a tax-free bonus to eligible individuals who work beyond Age Pension age, provided that they qualify for the Age Pension when they eventually retire. The maximum payment available is around $47,000 when you defer claiming the Age Pension for five years or more, and you're eligible for the full Age Pension when you do claim your entitlements. If you're eligible for a part-pension, you may be entitled to a part-Pension Bonus.

According to Centrelink, you will be eligible for the Age Pension bonus if you satisfy the following conditions:

> reached Age Pension age before 20 September 2009 (age 65 for men, 63.5 for women).

> continue to work since reaching Age Pension age.

> have not yet claimed the Age Pension.

> register before 1 March 2014.

If you have already applied for the PBS, then the scheme continues to apply for you, subject to meeting the scheme's 'work test' condition.

Note: Your eligibility for the PBS runs from the time you register, rather than the time you reached Age Pension age.

If you think that you may be entitled for the PBS, we recommend that you immediately make an appointment with Centrelink to formally determine your eligibility. Westmount clients can call our office if in doubt - we'll perform a quick calculation based on your current circumstances - beats waiting in a queue! Rick Maggi (Westmount. Financial Solutions.)

01/09/13: The US fiscal cliff, debt ceiling and economic outlook.

Oliver's Insights for January 2013

This note looks at the deal to avert the US fiscal cliff along with its debt ceiling and broader economic outlook. Generally pretty positive for 2013 (easy reading). Enjoy! Rick Maggi. Read here

02/07/13: Happy New Year!

New Financial Year. Fresh Start.

Want to be kept informed in real-time? Tired of stale, irrelevant websites and blogs? Subscribe to our free updates here.  Happy New Year!  Rick Maggi & Staff.