Guide to the 2017/18 Federal Budget

The Budget is the most important policy announcement of the Federal Government’s fiscal agenda, and contains a broad range of revenue, expense and investing activities.

This guide provides a general overview of the following 2017/2018 Federal Budget announcements:

  • Super, retirement and housing affordability
  • Income tax and Medicare levy
  • Aged Pension and Government Support

It’s important to remember that many of these policies will need to be passed by Federal Parliament before they come into effect. This might mean that the details of some of these measures could change. We’ll make sure to update you if they are finalised or significantly changed.


Super, retirement and housing affordability

After introducing sweeping changes to the superannuation and retirement income system at the last Federal Budget, this year’s Federal Budget provides some stability and certainty. However, some important changes have been announced, including the proposed use of superannuation to promote better housing affordability.

First home super saver scheme

This measure may apply to you if you’re thinking about saving a deposit for your first home through superannuation.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

Voluntary contributions to super made from 1 July 2017 will be allowed to be withdrawn by first home buyers and used, along with associated deemed earnings, to help fund the deposit for their first home. First home savers will be able to contribute up to $15,000 per year and $30,000 in total. These contributions will count towards the relevant contributions caps.

If you’re saving, or thinking about saving, for a deposit to buy your first home, you’ll be able to make voluntary contributions to your super account from 1 July 2017 and then take advantage of the concessional taxation environment (on contributions and investment earnings) in your super account to save more quickly.

If you’re a Qantas Group employee, you can schedule regular contributions from your pay to be paid directly into your Qantas Super account (as salary sacrifice before-tax or after-tax contributions).

Alternatively, all members can make lump sum after tax contributions into your super account.

Contribution caps apply.

Once you’ve saved enough for a deposit, you’ll be able to withdraw the amount including deemed earnings from 1 July 2018 to use for a first home deposit.

Amounts you withdraw will be taxed at marginal tax rates less a 30% offset.

Contributing the proceeds of downsizing to superannuation

This measure could apply to you if you’re nearing age 65 or over.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

A person aged 65 or over will be allowed to make a non-concessional (after-tax) contribution to super of up to $300,000 from the proceeds of selling their home from 1 July 2018.

These contributions will be allowed on top of those currently permitted under existing rules and caps and they will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions.

This has the potential to make it more attractive financially to downsize from a larger home to something smaller once you’re over 65.

For couples who own a house together, both individuals will be able to take advantage of this measure for the same home.

If you are over 65, have held your principal place of residence for a minimum of 10 years, and want to downsize your home, you will be able to contribute up to $300,000 of the proceeds of the sale into your super account in Qantas Super without having to worry about the contribution caps and other restrictions on making non-concessional contributions.

Note: Sale proceeds contributed to super under this measure will count toward the Age Pension assets test and therefore could impact your eligibility for the Age Pension.

Income tax and Medicare Levy

The Federal Budget contains some important changes to the way individual income is taxed. This includes changes to the Medicare Levy, the expiry of the Temporary Budget Repair Levy and HELP Debt repayment.

Increase to the Medicare Levy

This measure is likely to affect you if you are required to pay the Medicare Levy.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

The Medicare Levy will be increased from 2.0% to 2.5% of taxable income from 1 July 2019.

If you’re required to pay the Medicare Levy, your take home pay may be impacted from 1 July 2019.

You’ll just need to be aware that you may see a change in your take home from 1 July 2019.

Temporary Budget Repair Levy

This measure will affect you if you earn more than $180k a year.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

The Temporary Budget Repair Levy which was introduced in the 2014/15 Federal Budget has not been renewed. This means that any income you earn above $180,000 in the 2017/18 year will no longer be subject to the 2% levy.

If you’re earning an annual salary of over $180,000, you will see a change in your take home pay from 1 July 2017.

You may want to consider turning the boost in your take home pay into voluntary contributions to your Qantas Super account.

Increase in Medicare Levy Low Income Threshold

This measure is likely to affect you if you are a lower income earner.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

The Medicare Levy low-income thresholds for singles, families, and seniors and pensioners will increase from the 2016/17 financial year.

Once your income exceeds your threshold, you will pay the Medicare Levy.

The threshold for singles will be increased to $21,655. The family threshold will be increased to $36,541 plus $3,356 for each dependent child or student. For single seniors and pensioners, the threshold will be increased to $34,244. The family threshold for seniors and pensioners will be increased to $47,670 plus $3,356 for each dependent child or student.

Be aware that there may be a change in your take home pay if your income is close to the threshold.

HELP Repayment changes

This measure may affect you if you have a HELP loan and earn more than $42,000 pa.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

A new set of repayment thresholds and rates under the higher education loan program (HELP) will be introduced from 1 July 2018.

A new minimum threshold of $42,000 will be established with a 1% repayment rate and a maximum threshold of $119,882 with a 10% repayment rate.

If you have a HELP debt and earn over $42,000 annually, you’ll be required to have repayments deducted from your salary (as additional income tax) to repay the debt.

The amount of the repayments will increase as you earn more, with a maximum repayment rate of 10% if you earn over $119,882.

You’ll just need to be aware that you may see a change in your take home pay from 1 July 2018.

Aged Pension and Government Support

The Federal Budget contains some important changes to the way in which the Government supports Australians and the eligibility rules for the Aged Pension.

Energy Assistance Payment

This measure is likely to affect you if you’re receiving certain Government benefits.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

People receiving qualifying Government payments will receive a one-off Energy Assistance Payment of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017 and who are resident in Australia.

This means that you can expect to receive an Energy Assistance Payment if you receive one of the following payments: Age Pension, Disability Support Pension, Parenting Payment Single, the Veterans’ Service Pension and the Veterans’ Income Support Supplement, Veterans’ disability payments, War Widow(er)s’ Pension, and permanent impairment payments.

You don’t need to do anything – if you qualify, you’ll receive the payment and notice from the Government.

Eligibility for the Aged Pension

This measure is likely to affect you if you if you are approaching retirement and have recently resided overseas.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

The residency requirements to qualify for the Aged Pension and the Disability Support Pension will change from 1 July 2018 to require 15 years of continuous Australian residence to be eligible.

There are some exceptions which reduce this to 10 years if at least five years of residence were during your working life or you didn’t receive any activity tested income support for a cumulative period of at least five years. There is also an exception for those who acquire a disability while in Australia.

If you are approaching retirement and haven’t been an Australian resident for the required time, there is a possibility that you may not be eligible for government support such as the Aged Pension.

You can get in touch with the Department of Human Services to discuss your eligibility.

Pensioner Concession Card Reinstatement

This measure is likely to affect you if you lost your entitlement to the Pensioner Concession Card on 1 January 2017.

What’s the proposed change? What could this change mean for me? What are some steps I can take?

The Pensioner Concession Card will be reinstated for pensioners who became ineligible due to changes to the pension assets test on 1 January 2017.

If you lost your Pensioner Concession Card due to the changes on 1 July 2017, you will be able to use the card to access Commonwealth subsided hearing services.

You can get in touch with the Department of Human Services to discuss how you might be able to have your card reinstated.