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The 2017 Budget – Consumers and business both take some gains

Now that the dust has settled and the financial celebrities have had their say, it’s time to separate the hyped-up headlines from the reality. Here are some of the leading gains and potential problems from this year’s budget.

$20,000 Instant asset write-off continued

The $20,000 immediate deductibility threshold has been extended for another 12 months to 30 June 2018. The write-off will also now apply to businesses with an annual turnover of $10 million, as opposed to the previous threshold of $2 million, after the definition of small business was redefined in the recently introduced company tax rate legislation.

The extension should be considered a win for small business. As MYOB CEO Tim Reed said “It encourages business growth and is exactly the type of measure that delivers confidence to the business community. Making the $20,000 instant tax write-off permanent for new assets is a key priority for SMEs.”

The Institute of Public Accountants (IPA) is also impressed and wants the write-off to become permanent. CEO Andrew Conway said: “The IPA has long advocated for the write-off initiative and we are relieved that common sense has prevailed to extend the time period. Small businesses Australia-wide should be very pleased with this outcome; it brings an injection of economic growth, giving small businesses the confidence to buy new equipment, reinvest in their operations and grow.”

First home buyers onto a winner

At a cost to the budget of around $250 million over the next 4 years, the Treasurer’s decision to provide positive assistance to first home buyers was met with widespread approval. Thanks to the new scheme, first home buyers will be able to fast-track first home buyer savings by at least 30%, with up to $30,000 of voluntary superannuation contributions able to be used as a house deposit.

Another benefit to first home buyers comes courtesy of the low tax rules applying to salary sacrifice, with contributions and earnings taxed at 15%, rather than existing marginal tax rates.

REA economist Nerida Conisbee said the savings plan will be of benefit because “One of the biggest obstacles for first home buyers is getting the deposit together.”