Budget 2018: Taxpayers Front and Centre, Pensioners Right Behind and Potential Homebuyers on the Back Burner

Treasurer Scott Morrison launched the 2018 Budget last Tuesday 8 May, promising more jobs, essential services and a budget that delivers a 'strong economy'. As the dust has settled, find out what it means for you and how it might affect your finances.

Taxpayers in the spotlight

One of the biggest winners that came out of the Budget for this year was you - the taxpayer. While there have been some criticisms directed at the timing of the election and the outcomes of this budget for everyday voters, it’s not a bad deal.

ccording to the ABC’s Budget Winner and Losers Breakdown (May, 2018), the government plans to deliver tax relief to lower/middle-income Aussies. Scott Morrison argues the plan will mean that 94% of Aussie taxpayers will pay no more than 32.5 cents on the dollar, benefitting approximately 10 million people.

From July 2019, the tax bill for people who earn up to $37,000 will be reduced by $200. This reduction will increase slightly for people who earn between $37,000 and $48,000. The maximum offset of $530 will be applied to people who earn between $48,000 and $90,000. For people who earn over $90,000 and up to a taxable $125,000 a year, this benefit will decrease back to zero.

Also from July 2019, the people on an income between $87,000 and $90,000 will move to the lower bracket and only pay 32.5% instead of 37%. From 2022, the top threshold for the lower 19% tax bracket will increase from $37,000 to $41,000.

This means you’ll get a larger lump sum back at tax time – something you could perhaps put towards paying off your mortgage sooner or dedicate to a savings account.

Superannuation changes

For anyone who pays superannuation, there are big changes underway in this Budget. These changes are designed to secure the retirement income of Aussies. All superannuation transfer fees are planned to be banned, and all abandoned or inactive accounts will be transferred to the Australian Tax Office (ATO) to be reunited with their respective account holder.

Pensioners given a boost

This budget focuses on aiding older Australians and pensioners. Under the Pension Work Bonus Scheme, pensioners will be able to earn more without affecting their pension allowance. Furthermore, the Pensions Loan Scheme will now be boosted so that everyone over pension age can successfully mortgage their home to the government to receive fortnightly payments.

This will enable them to borrow against the value of their home without the need to sell-up and move away. The government investment will boost pensioners fortnightly income stream to 150% of the current age pension rate using the equity in their home. Self-employed people will now be included in the scheme, too.

Housing affordability on the back burner

However, this is where the budget falls short. While housing affordability is frequently cited as a significant problem that young Australians face, it has all but been ignored in the new budget. While this budget encourages older Aussies to stay in the family home for longer, younger Aussies are still only left with the Superannuation Savings Scheme from last year’s plan.

Whether the boost to pensioners will work against young Aussies who want to break into the property market, only time will tell.

Public Transport Upgrade

At least we know that Perth is being relegated $1.05 billion for the Metronet rail project and $944 million to help free up the traffic in the city. This is a positive step towards building better public infrastructure that Perth needs. But will this cure our chronic traffic congestion problem…? Unlikely.

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