THE 2017 BUDGET OVER BREAKFAST

with Damian Knoblanche

DISCLAIMER. The information in this presentation is general commentary only and should not be considered to be advice. It has been prepared without considering your objectives, financial situation or needs. You should not act solely on the basis of the material or comments in this presentation and you should consider the appropriateness of any advice before acting on it. Also changes in legislation may occur quickly. Therefore, we recommend that our formal advice be sought before acting in any of the areas. This presentation is issued and/or presented as a general guide for clients and others.

Peak Partnership Pty Ltd. ABN 24 064 723 550.

THE BIG PICTURE. FAIRNESS | OPPORTUNITY | SECURITY

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07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

$ Billion

THE DEFICIT

Source: www.budget.gov.au Underlying Cash Balance

THE DEFICIT. THE HEADLINES. $29.4 billion Deficit this Budget Down from $37.6 billion Deficit last year Expected return to Surplus now 2020-21 to +$7.4 billion Last Surplus was 2007-08 under Wayne Swan GDP increases to 3.0% for 2017-18 (up from 2.75%) Unemployment down from 5.75% to 5.25%

WINNERS & LOSERS.

BIG BANKS TAXPAYERS

FOREIGN HOME

OWNERS

SCHOOL STUDENTS

FIRST HOME

BUYERS

NDIS SME BUSINESS SUPER

INVESTORS

UNI STUDENTS

INFRA- STRUCTURE

ITS BUSINESS.

ITS BUSINESS. HOW IS THE 10 YEAR ENTERPRISE TAX PLAN TRACKING?

Companies with less than $10 million annual turnover

SBE TODAY Companies with less

than $25 million annual turnover

FROM JULY 2017 With $10 million+ annual turnover

BIG BUSINESS Businesses with less

than $50 million annual turnover

BY 1 JULY 2026

30.0 27.5 27.5 25.0

Source: www.ato.gov.au Reducing the Corporate Tax Rate

ITS BUSINESS. IF YOUR BUSINESS EMPLOYS FOREIGN WORKERS

A Foreign Worker Levy will be introduced (replaces 457 Visa) to fund up to 300,000 apprenticeships/traineeships over 4 years. The fees are:

TURNOVER Permanent Work Visa Temp. Skills Shortage Visa < $10 million $3,000 up-front $1,200 up-front > $10 million $5,000 up-front $1,800 up-front

ITS BUSINESS. BANK BASHING IS BACK! Banks to pay a new tax of $6.2b over 4 years, from 1 July 2017 Deposit-taking banks with licensed entity liabilities of $100b + Big Four + One will pay $300 - $400 million annually (0.6%) Measure designed to help with Budget repair Fines between $50 - $200 million for banking sector misconduct, with senior bank executives to be registered

INFRASTRUCTURE PROJECTS. PLANES, TRAINS, AUTOMOBILES (AND A BIT OF HYDRO ELECTRICITY).

$10b National Rail Program (Brisbanes Cross-River Rail?) $5.3b equity in Western Sydney Airport (completed 2026) $472m Regional Growth Fund (help regions adapt to change) $100m Advanced Manufacturing Fund (inc. Vic & SA auto industry) $8.4b for Melbourne-Brisbane Inland Rail (work starts 2017-18)

INFRASTRUCTURE PROJECTS. ACKNOWLEDGING REGIONAL QUEENSLAND AND RURAL AUSTRALIA

$844m Bruce Highway upgrade $6m Mt Lindsay Highway upgrade $2b Farm Business Concessional Loan Scheme $1b ongoing Landcare funding over 5 years

BUSINESS WATCHDOG. Multinational Anti-Avoidance Law: extending to corporate structures involving foreign partnerships and foreign trusts. Crack-down expects to raise total $4b this FY

Black Economy: Building & Construction Taxable Payments Reporting to include courier and cleaning industries from 1 July 2018

Black Economy: Banning technology that falsifies sales records to avoid paying tax.

Red Tape: $300m to States and Territories to remove unnecessary regulatory restrictions

$20,000 ASSET WRITE-OFF. BUDGET BONUS: Extended to 30 June 2018

SME have 416 days to take advantage

SME with turnover up to $10 million*

90,000 more businesses can access scheme

Depreciable assets: installed/ready for use

NOT a tax refund *Subject to legislation being passed

YOU, THE TAXPAYER.

YOU, THE TAXPAYER. No changes to current income tax rates

Budget Repair Levy of 2.0% on incomes > $180,000 ends 30 June

Medicare Levy to 2.5% from 1 July 2019 on incomes > $21,655

Medicare Levy increase to help fund NDIS, raising $8.2b over 4 years

Medicare Guarantee Fund: ongoing funding of Medicare Benefits Schedule and Pharmaceutical Benefits Scheme

Zombie tax measures abolished (from prior Budgets)

YOU, THE TAXPAYER. 2017-2018 INCOME BANDS TAX RATE

$0 - $18,200 00.0% $18,201 - $37,000 19.0% $37,001 - $87,000 32.5% $87,001 - $180,000 37.0% $180,001 and over 45.0%* *Budget Deficit Repair Levy of 2.0% ends 30/06/2017

YOU, THE TAXPAYER. Government will invest $37.3b on childcare to help ease cost of living pressures for approx. one million Australian families

Crackdown on unemployment welfare recipients, including alcohol and drug testing for 5,000 new recipients and penalties for not actively seeking work reduced or cancelled welfare payments

Depending on family structure and household income, childcare rebates could increase by thousands of dollars

Housing affordability. First Home Buyers can salary sacrifice $15,000/year into superannuation, to a maximum of $30,000 to save for a home deposit (from July 2017). Voluntary contributions at 15% and withdrawals attract 30% rebate. Both members of a couple can take advantage of the scheme, effectively $60,000 at a lower rates.

HOUSING AFFORDABILITY & ACCESSIBILITY. There is no silver bullet to the housing affordability crisis.

Foreign ownership in new property developments restricted to 50%

Foreign owners of property that is unoccupied for 6 months in a year will be taxed

Foreign residents not eligible for Capital Gains Tax Main Residence Exemption

CGT withholding rate will be 12.5% (up from 10%) and the threshold will be reduced to $750,000 (from $2 million)

University funding cut by $2.8b, via a 2.5% efficiency dividend on commonwealth grant scheme payments in 2018 and 2019

University students to pay up to 7.5% more in fees, starting at 1.8% a year in 2018 and totalling a 7.5% increase by 2021

The threshold for repaying student loans will be reduced from $55,000 to $42,000 from July 2018, indexed to CPI (not AWE)

Overall $2.2b increase in school funding over the next 4 years, but at least 24 private schools will have funding cut

A HECS ON Students.

THATS JUST SUPER.

THATS JUST SUPER. Some major changes to superannuation (announced previously) from 1 July 2017, but worth recapping:

Contributions limits going down

High income earners threshold lowered

Transition to Retirement (TTR) tax exemptions

Retirement Phase Transfer Cap of $1.6 million

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THATS JUST SUPER. CONCESSIONAL CONTRIBUTIONS CAPS

Pre-July Post-July Under 49 years $30,000

$25,000 49 and older $35,000

THATS JUST SUPER. NON-CONCESSIONAL CONTRIBUTIONS CAPS

Pre-July Post-July 65 and older $180,000 $100,000 Under 65 years $540,000 $300,000

Subject to $1.6 million Cap

THATS JUST SUPER. HIGH INCOME EARNERS & CONTRIBUTIONS TAX

Pre-July Post-July $250,000 + pa 15% 30% $300,000 + pa 30% 30%

THATS JUST SUPER. TRANSITION TO RETIREMENT TAX EXEMPTIONS

Must be of preservation age to access TTR - depending on your date of birth, that could be between 55 and 60 years old

No limit on how much you can transfer into TTR pension phase, but you need to withdraw between 4%-10% as a pension payment

From 1 July, income generated by assets supporting a Pension Account will attract 15% tax - and you won't be able to treat certain income stream payments as lump sums for tax purposes

THATS JUST SUPER. RETIREMENT PHASE TRANSFER CAP

From 1 July 2017, there will be a $1.6 million cap on the total amount of super that can be transferred into a tax-free retirement account.

The cap will apply to current retirees (ie retrospectively) and those yet to enter retirement phase with their super.

RETIRED LIFE.

RETIRED LIFE. Pensioners will get a one-off payment of $75 (for singles and single parents) and $125 for pensioner couples, to be paid by 30 June to compensate them for power price rises

Pensioner Concession Card will be reinstated for those who lost it under Asset Rebalancing on 01/01/2017 no pension, but you get the card back

Home Support Service has been extended: helping to keep people living independently in their own home

RETIRED LIFE. THE DRIVE TO DOWNSIZE: People over the age of 65 who downsize their home can contribute up to $300,000 of proceeds into super as NCC

Property must have been held for 10 years or longer and the incentive is on a per person basis ie. couples = $600,000 maximum contribution to super (not subject to $1.6m Cap)

Scheme starts 1 July 2018 and is expected to help up to 10,000 people each year

ADVICE & STRATEGY.

TAX STRATEGY BASICS. Timing and advice are key as usual! Historically, $2 million SME turnover has been the threshold to watch,

but has shifted to $10 million Delay income to after 30 June 2017 Bring deductible expenses forward to be