2015 Federal Budget: What does it mean for property investors?

The 2015 Federal Budget has finally been revealed, with the Abbott Government’s efforts sketched out in a series of amendments. Each of these amendments details key factors, with dollars divided among small business growth programs, military operation expansions, and healthcare accessibility. All of these elements prove essential, but anxious investors spare them little concern, wanting instead to know the what impact these will collectively have on our economy and the property markets.

Let’s examine the Federal Budget and its effects on property investments in Perth and beyond.

Budget Changes

The 2015 Federal Budget changed surprisingly little to property investment laws. While many critics expected heavier taxes on property and super funds, the truth proved far more appealing:

Capital Gains: No major changes with small business owners (including investors) received a capital gains rollover, with no liabilities charged for legal structure changes.

Negative Gearing Unchanged: Negative gearing (a tax program that allows investors to deduct the operating expenses of properties) remains unchanged.

Self-Managed Super Funds: While large super funds will soon experience levy increases, self-managed options will not.

Superannuation: The only change offered to the superannuation tax was its filing process. Parliament noted the need for new measures, wanting to expedite paperwork and remove redundant processing.

The Economic Effect

The central theme of the 2015 Federal Budget was economic growth. To ensure small business success, as well as encourage investments, multiple relief programs are proposed including:

● Accelerated Depreciation
● Wage Subsidiaries
● Unincorporated Business Discounts (up to 5%)
● Incorporated Business Discounts (up to 1.5 %)
● Fringe Benefits Tax Expansions

These programs are hoped to encourage small business creations, reducing overall fees while generating higher profits.

However, as a small business owner myself I consider the effect to be negligible and not worth the billions of dollars that the government loses in revenue. Sure I hope it stimulates small business but I can't see how it will.

What Does This Mean for Investors?

The combination of unchanged taxes and increased business growth promises to stabilize our property markets and return them to sustainable long term growth. However I can’t see how the budget can achieve this wonderful goal. I am realistic that cuts have to be made to bring the overall budget back into surplus but surely we can spend our money in smarter ways to really benefit small business.