As the new financial year rolls in there are a number of policies that are set to impact many Australians. We’ve summarised some key changes that could affect your finances and budgeting starting July 1 2018.
- Income tax rate cuts: To avoid bracket creep, the 32.5% income tax rate now cuts in at $90,000, rather than the previous $87,000. As a result, if you earn $90,000 a year you will pay $135 less tax.
- Low and middle income tax offset: People earning up to $37,000 a year will get an offset of up to $200, while people earning between $37,000 and $90,000 will get an offset of up to $530. Of the estimated 10 million people to benefit from the scheme, 4.4 million will receive the maximum benefit of $530.
- New hourly minimum wage The hourly minimum wage will be increased from $18.29 to $18.93, taking the weekly minimum wage from $694.90 to $719.20.
- Penalty rate changes After last year’s Fair Work Commission ruling to reduce penalty rates from double-time (200%) to time-and-a-half (150%) over several years, the next stage of the transition will take Sunday penalty rates down to 180% for permanent staff and 185% for casuals.
- GST applied to foreign purchases From July 1, new online GST laws will require businesses with an annual turnover greater than $75,000 to collect GST on purchases under $1000. This includes retailers such as Amazon, ASOS and eBay.
- Comprehensive credit reporting (CCR) will become mandatory CCR has been existed since 2014, however the majority of the Big 4 banks have opted to not take part. Currently, most lenders only share negative information like defaults, overdue payments and bankruptcy, omitting any positive information such as on-time repayments. The new system means that it will become a requirement to provide all information, negative and positive. Experts predict the change will likely result in most Australians seeing their credit score increase. Regardless of your credit score, FundingPro have a number of loan options available.
- Downsizing contributions From July 1, people aged 65 and older will be able to contribute up to $300,000 from the sale of their family home to their superannuation without it being affected by existing contribution caps. To be eligible, the downsizer must have owned the home for at least 10 years prior to the sale and live in it as their main residence. If you’re looking to refinance, we can help here.
- Begin drawing from the First Home Super Saver Scheme The First Home Super Saver Scheme allows individuals to make voluntary contributions of up to $15,000 per year and $30,000 in total, to their superannuation account to purchase a first home. From July 1, 2018, it is possible to apply to withdraw these voluntary contributions for a first home deposit. We can make the process of getting your first home loan a smooth one, apply now.
- Childcare subsidy changes From July 1, the annual cap on the childcare rebate will be removed for households with an income less than $186,000. It will be increased from $7,500 to $10,000 for those who earn between $186,000 and $351,000. The percentage of the rebate will be means tested; households on incomes up to $66,958 will receive the full rebate of 85%, after which it tapers down to 50% for those on $171,958–$251,248, 20% for those on $341,248–$351,248 and no subsidy for those on a household income of more than $351,248.
- Instant Asset Write-Off Scheme extended Announced as part of the 2018 federal budget, the scheme will be extended until June 30, 2019, instead of June 30 this year. As part of this scheme, businesses can instantly write-off any asset they have purchased instantly if it falls under the $20,000 cap. Equipment and vehicle finance is a great way to free up your working capital while taking advantage of the scheme, apply here.
- Mandatory single-touch payroll Employers with 20 or more employees will be required to report payments such as salaries, wages, pay-as-you-go (PAYG) withholding and superannuation directly from their payroll or accounting software from July 1. This will mean that the Australia Tax Office has near-instant access visibility into employee’s tax, wage and super payments.
- Lower corporate tax rate A lower corporate tax rate of 27.5 per cent has been extended to businesses with a turnover of less than $50 million. The rate will reduce to 25 per cent in 2026/27. Companies earning more than $50 million will still pay 30 per cent.
Looking to grow your business, buy a home or find a car this financial year? FundingPro can find your ideal loan option from over 70 lenders. Apply now.