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Federal Budget – 2017-18 – Overview

Comprehensive Budget overview : 27 sections covering every aspect of this year's Budget plus 6 Appendix of support information.



Through this link you'll be able to access a comprehensive breakdown of this years Budget.


There are 27 sections that can be accessed by either a drop down menu in the right panel or a Next button at the bottom of each section.


The main themes of this year's Budget are: 


  •   Stronger growth to deliver more and better jobs
  •   Guaranteeing the essential services that Australians rely on
  •   Tracking cost of living pressures
  •   Ensuring the Government lives within its means
  •   Budget at a glance
  •   Budget aggregates and major economic parameters





The three core pillars of this year’s budget

The following links give you access to the specific issues and topics addressed in the 2017-18 Budget.



While there is much information in the other two Budget articles the following three links provide far more detail, via a number of sub pages, on the three core pillars of this year's budget.

When on the site click on the drop down in the right panel for access to sub-pages or use the Next button at the bottom of each sub-page.

Australia in a nutshell

The following information is derived from ABS data.





Period Last 
National Accounts  
Gross domestic product GDP, Chain volume measures – Trend Dec Qtr 2016
421 338
Gross domestic product GDP, Chain volume measures – Annual 2015-16
1 659 783
International Accounts  
Balance on Goods and Services – Trend Feb 2017
3 320
Total Goods and Services Credits – Trend Feb 2017
32 957
Total Goods and Services Debits – Trend Feb 2017
29 637
Balance on Current Account – Trend Dec Qtr 2016
-5 437
Net International Investment Position (IIP) – Original Dec Qtr 2016
1 021 612
Net Foreign Debt – Original Dec Qtr 2016
1 023 055
Consumption and investment
Retail turnover at current prices – Trend February 2017
Actual New Capital Expenditure in volume terms – Trend Dec 2016
Inventories held by Private Businesses, in volume terms – Trend Dec 2016
155 921
Total new motor vehicle sales – Trend March 2017
96 023
Income from sales of goods and services by Manufacturers in volume terms – Trend Dec 2016
81 807
Dwelling unit approvals – Trend Feb 2017
17 639
Building approvals -Trend Feb 2017
8 725.3
Total dwelling units commenced – trend Dec 2016
56 357
Building work done – Chain Volume Measures – Trend Dec 2016
26 619.7
Engineering construction work done – Chain Volume Measures – trend Dec 2016
19 269.7
Consumer price index (2011-12 = 100.0) – Original Mar Qtr 2017
Index no.
Producer Price Indexes, Final Demand (2011-12 = 100.0) – Original Dec Qtr 2016
Index no.
Import price index (2011-12 = 100.0) – Original Dec Qtr 2016
Index no.
Export price index (2011-12 = 100.0) – Original Dec Qtr 2016
Index no.
Wage Price Index (2008-2009 = 100.0) – Original Dec Qtr 2016
Index no.
Labour Force and Demography
Employed persons – Trend Mar 2017
12 033.4
Participation rate – Trend Mar 2017
0.0 pts
-0.4 pts
Unemployment rate – Trend Mar 2017
0.0 pts
0.0 pts
Employment to Population ratio – Trend Mar 2017
0.0 pts
-0.3 pts
Job Vacancies – Trend Feb 2017
Estimated resident population – (Preliminary) Sep Qtr 2016
Short-term overseas visitor arrivals – Trend (a) February 2017
For unemployment and participation rates, the changes are given as percentage points.
Company gross operating profits (in current price terms) – Trend Dec 2016
74 291
Average weekly earnings, full-time adults: ordinary time – Trend Nov 2016
Housing Finance
Housing finance for owner occupation, dwellings financed – Trend February 2017


na not available
np not published
. . not applicable or not available
(a) Data revised from July 2004 to December 2013. For information see Explanatory Note 12 & 13.

Most Aussies shun super advice

Less than 30 per cent of Australians have sought advice on a financial matter, including superannuation, in the past two years, new research has revealed.




The MLC Wealth Sentiment Survey found that more than 70 per cent of respondents received no guidance on superannuation, savings, investments, retirement or tax planning over the last two years.

In contrast, Australians who sought the advice of a financial planner rated their services highly, with 82 per cent rating the advice as ‘good’ to ‘excellent’ because it was tailored to their specific needs, the planner identified and understood their investing purposes and goals, and because the planner looked at risk and ways to minimise it.

“The decisions we make about our money affect us every day of our lives, and they really impact our happiness, so we need those decisions to be good ones that are based on our unique circumstances and goals,”  Greg Miller, said.

“While some people are well-equipped to go it alone, money matters are complex for some but critical for everybody, and over time the decisions you make can have huge implications.”

The survey also found that Australians were unsatisfied with their levels of wealth, with respondents rating their income four out of ten, their net worth 4.1 and their lifestyle 4.7.

Men were slightly more satisfied than women and satisfaction levels were higher across all aspects of wealth as income increased.

Wednesday, 11 April 2017

Tax headache relief: Here’s more help with pension assets changes

Let’s take a look at a practical example of how the new capital gains tax relief will operate for pension assets.




In particular, let’s focus on unsegregated pension assets, for three reasons. Firstly, unsegregated pension assets receive a different CGT relief than segregated pension assets. Secondly, unsegregated pension assets are more common than segregated pension assets. And finally, the CGT relief for unsegregated pension assets is more complex than that for segregated pension assets.


From July 1, 2017, major changes will take effect with respect to the taxation of superannuation. One change is that fund assets supporting transition-to-retirement income streams will no longer be eligible for an income-tax exemption. Another change is the introduction of the transfer balance cap, which (at the risk of oversimplifying things) limits the amount capital that can be used to commence a pension to $1.6 million). As a relief, certain legislation has been introduced that, as stated in (s 294-100), is designed to provide temporary relief from certain capital gains that might arise as a result of individuals complying with the following legislative changes:

The introduction of a transfer balance cap (as a result of Schedule 1 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016)
The exclusion of transition-to-retirement income streams (and similar income streams) from being superannuation income streams in the retirement phase (as a result of Schedule 8 to that Act).

A practical example

Assume that on November 9, 2016, (i.e., the start of what the legislation defines as the ‘pre-commencement period’), a sole member fund called the Sample Superannuation Fund had a total of $2.1 million in assets, of which $1.8 million was supporting pensions and $300,000 was not. Further assume that the fund did not have any ‘segregated current pension assets’ or ‘segregated non-current pension assets’ (i.e., the fund was using the proportionate method – also known as the actuarial method – to calculate and obtain its income-tax exemption).

Assume that the fund has the following assets:

  • $400,000 in cash
  • 5000 shares in BigCompany Ltd, which were purchased as a parcel in 2012 for $40 each (assume that shares are now worth $150 each, that is, a total of $750,000)
  • 1000 more shares in BigCompany Ltd, which were purchased as a parcel in 2014 for $70 each (similar to the above, these shares are worth $150,000)
  • real estate, purchased in 2003 for $200,000, which is now worth $800,000.

Note that the CGT relief for unsegregated pension assets results in a cost base reset as at ‘immediately before 1 July 2017’. This is different than CGT relief for segregated pension assets, where there is the ability to choose (within certain parameters) when the cost base reset occurs. Accordingly, let’s assume that the current market values of the assets as set out above will continue to be the market values as at immediately before July 1, 2017.

Also, note that the operative provisions (i.e., ss 294-115 and 294-120) do not expressly require than an asset be commuted out of a pension in order to obtain the relief. Although the ATO disagreed with this in the draft version of Law Companion Guideline LCG 2016/8 (see paragraph 21), it changed its position in the final version (see example 4 for an illustrative example of this).

Next, let’s say the fund partially commutes $200,000 of the pension and internally rolls the resulting lump sum back into accumulation.  

Subject to certain other assumptions – for example, that the fund is at all relevant times a complying superannuation fund, etc. – the fund will have the ability to choose to apply the CGT relief to some or all of its assets. Consistent with ATO Taxation Determination TD 33, the fund chooses to apply the relief to 700 of the shares in BigCompany Ltd that were purchased in 2012, and to the real estate.

Accordingly, the following ‘notional’ net capital gain arises:

  • 700 x ($150-$40), that is, $77,000, less a one-third discount, that is, $51,333.
  • $800,000-$200,000, that is, $600,000, less a one-third discount, that is, $400,000 (I assume that the grandfathered rules regarding trading stock do not apply).

Accordingly, the total ‘notional’ net capital gain is $451,333. In order to then derive the ‘deferred notional gain’, it is necessary to multiple this figure by the proportion that the actuary advises is not in pension mode. More specifically, assume the fund’s actuary advises that in respect of the 2017 financial year, the proportion calculated by dividing the fund’s ‘Average value of current pension liabilities’ by the fund’s ‘Average value of superannuation liabilities’ is 60 per cent. Therefore, to then derive the ‘deferred notional gain’ it is necessary to multiply $451,333 by 40 per cent (100 per cent minus 60 per cent). In light of this, the deferred notional gain is $180,533.

Assuming the 700 shares in BigCompany Ltd and the real estate are both disposed of in the same financial year (for example, the 2019 financial year), the net capital gain of the fund is increased by $180,533. Similarly, the cost base of the 700 shares is treated as being 700 x $150 and the cost base of the real estate is treated as being $800,000.

Some traps

Choosing the relief will reset the 12-month period when it comes to eligible for being a discount capital gain. In short, that means relief probably should not be chosen for some assets that will be sold during the 2018 financial year. Consider the following example of when it is detrimental to a fund to choose the relief: An asset was purchased during the 2016 financial year for $120. On June 30, 2017, its market value is $130. It will be sold on January 1, 2018, for $160. If relief is chosen, this will give rise to $4.50 of tax (i.e., [$160–$130]*15%). However, if relief is not chosen, this will give rise to $4 of tax ([$160–$120] x 10%).

Naturally, remember the role of pt IVA (i.e., the general anti-avoidance provision). As the ATO states in Law Companion Guideline LCG 2016/D:

Broadly speaking, schemes which do no more than that which is necessary to comply with those reforms will not be the subject of determinations under Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) (Part IVA). Schemes which abuse the relief are another matter …

The kinds of arrangements that the commissioner will scrutinise carefully with a view to determining whether Part IVA applies will exhibit the following features:

  • They place the taxpayer in a position to make the choice
  • They go further than is necessary to provide temporary relief from CGT because members comply with the reforms, and They exhibit contrivance of manner, a lack of correspondence of form with substance, or other matters relevant under section 177D of the ITAA 1936, that point to the purpose of avoiding tax.

I suspect that the largest pt IVA concerns will occur for account-based pensions, not transition-to-retirement income streams, particularly those eligible for the segregated pension asset CGT relief, not the relief described in this article. 

For full details, see subdiv 294 B of the Income Tax (Transitional Provisions) Act 1997, which was inserted by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016. Also instructive is the ATO’s Law Companion Guideline LCG 2016/8.

This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.


BY:  Bryce Figot
April 12, 2017

More withdrawals from ‘the bank of mum and dad’

Think about what has happened in the six months since Treasury secretary John Fraser spoke of his concerns for retirement savings of parents who help their children into housing by making withdrawals from “the bank of mum and dad”.




House prices in Sydney and Melbourne have continued to accelerate and, anecdotally at least, so has parental financial assistance with their children's first home.

Fraser is worried that helping children into costly housing, as homebuyers or tenants, may inhibit their own abilities to save for retirement, including through their super.

Parents can find themselves trying to cope with something of a balancing act: trying to save to finance their own retirement and understandably wanting to help their children into the high-cost housing market.

It is difficult to gain other than an anecdotal impression of just how much parents nearing retirement or already in retirement are helping to finance their adult children's housing – particularly with that elusive deposit on first homes.

Clearly, a growing personal financial issue is whether parents can afford to provide this financial assistance given their circumstances.

Perhaps an appropriate starting point for parents is to realistically assess the adequacy of their retirement savings and overall financial position, perhaps with the assistance of an adviser who understands their family circumstances.

Much-publicised high levels of home ownership among older Australians can lead to inaccurate conclusions about the state of their financial wellbeing.

The Australian Bureau of Statistics reports that close to 80 per cent of households aged over 65 “own” their homes, based on the Commonwealth Census. However, these particular statistics do not make a distinction between “home owners” who own their homes outright and those with outstanding mortgages.

And the Reserve Bank observed almost two years ago in a submission to a Senate committee inquiry on home ownership that “older age groups are now less likely to own their home outright than in the past”.

The much-quoted retirement standard from the Association of Superannuation Funds of Australia (ASFA) – providing estimates of living costs for retirees to meet different standards of living – is calculated on the basis that retirees own a home with no outstanding mortgage.

Ideally, we would enter retirement as debt-free homeowners with sufficient retirement savings to finance a satisfactory lifestyle – with perhaps enough money left to assist our children into a first home.

There's much to think about before making withdrawals from “the bank of mum and dad”.

Robin Bowerman
​Head of Market Strategy and Communications at Vanguard.
25 April 2017

ATO set to release guidance targeted for SMSF clients

In the coming weeks, the ATO will be distributing letters and guidance notes designed to help practitioners explain issues relating to the superannuation reforms to clients, says a technical expert.




The ATO will be releasing communications from May onwards. These communications include member targeted letters and guidance notes that practitioners can use to help explain issues to clients, Australian Executor Trustees senior technical services manager Julie Steed told SMSF Adviser.

The detailed guidance will cover topics including dealing with the transfer balance cap, death benefits and the transitional CGT relief.

Ms Steed said the guidance will also cover topics such as payment splits with the new total super balance, changes to the personal super contributions and the spouse offset.

“The ATO has indicated that they’re designed to help practitioners in discussions with their clients and they’re in as plain English as you can make,” she said.

“I actually think the ATO have done a really good job in terms of the communications they’re preparing and if you consider about how long it used to take to get anything of a technical nature out of the ATO, it used to take years.”

In terms of the guidance produced for SMSF practitioners, all the law companion guides have been practical and helpful and have been produced in a fairly timely manner, Ms Steed said.

“The trade-up for that is that there have been a couple of small technical errors but as soon as they were identified and sent back to the ATO, they were fixed immediately.”


Wednesday, 26 April 2017

2011 Census – what was the make up of your area?

The following link is a handy ABS tool if you want to see the demographic make-up of the area you lived as recorded in the 2011 Census.  2016 Census information starts becoming available from June 2017.




Please click here to access this tool and then type the town or suburb you want to investigate further.  Very interesting data.

Life’s financial turning points: good and not-so-good

The marriage and divorce statistics for 2015 sadly suggest that 43 per cent of Australian marriages may end in divorce. Significantly, this number-crunching does not include separations of de facto couples.




Unfortunately, the breakdown of a relationship is a reality for many couples and it is a reality with typically damaging financial and emotional consequences.

We face a series of widely-shared financial turning points during our lives. Yet how we handle them obviously differs widely.

ASIC's personal finance website MoneySmart has long published a comprehensive feature, Life's events – last updated this month – with tips about how to deal with our financial turning points, the good and not-so-good. And unsurprising, the breakdown of a personal relationship numbers among the life events on ASIC's list.

Financial turning points include receiving our first pay, joining our first super fund, leaving home for the first time and entering a personal relationship. Among the others are buying our first (second or third) home, dealing with serious illness in our families, coping with a partner’s death, losing our job and eventually retiring.

A decision to begin saving seriously to meet our long-term goals and the creation of our first financial plan are high among our key financial milestones.

Thinking about the feasibility of ‘downsizing’ to a smaller home as we age is becoming more common and finding suitable age care is climbing higher in the list of life events with the ageing of the population.

There are straightforward ways to help prepare for financial turning points such as budgeting, saving, investing, obtaining adequate insurance, considering quality professional advice when necessary and estate planning.

How we cope as investors with sharply rising or sharply falling investment markets can be a life-changing event. Investors who set an appropriately-diversified strategic portfolio, and who remain disciplined and focused on their long-term goals are best-placed to cope with market upheavals.

It is critical to try to stop one life event having negative implications for another life event. For instance, a failure to remain disciplined during a fall in share prices of the magnitude that occurred during the GFC may reduce your standard of living in retirement – even though that retirement may be many years away.

Planning for life's financial events is at the core of sound financial planning.

Robin Bowerman
​Head of Market Strategy and Communications at Vanguard.
5 April 2017

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