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The January 1 property and super changes that you need to know

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First home buyers

The $500 million First Home Loan Deposit Scheme is set to come into effect January 1, supporting up to 10,000 loans on a first in, best dressed basis.

The scheme, which will guarantee loans for up to 15% of the purchase price, will be available to first home buyers with taxable incomes up to $125,000 per annum for singles and up to $200,000 per annum for couples, and apply to principle and interest loans only.

january 1 2020 changes

In Sydney, eligible buyers will be able to access the scheme when purchasing a home worth up to $700,000, while loan guarantees in the rest of the state will be capped at $450,000.

In Melbourne and greater Victoria, home values will be capped at $600,000 and $375,000 respectively.

Super changes

Those with multiple employers will have the option to stop receiving superannuation payments from some employers. The move is designed to prevent employees going over their concessional contributions cap.

Later in the year

2020 won't have any January 1 tax changes, however there are a number of changes coming later in the year.

For starters, taxpayers now won't receive an end of year payment summary from their employer. Through the ATO's new single touch payroll (STP) system, employers now report payroll data in real time to the ATO. As such, the ATO has removed the obligation for employers to provide year end information to employees.

Taxpayers will instead receive an "income statement" from the ATO that can either be downloaded from myGov or can be obtained by your tax agent.

Also, taxpayers will still benefit next year from the low and middle income tax offset which gives a tax offset of up to $1,080 for taxpayers earning up to $126,000.

"Unfortunately, in 2019 the LMITO doesn't seem to have given the boost to the economy that the government was expecting so I wouldn't be surprised if the Treasurer brings forward the already legislated extra tax cuts, currently due in 2022-23, to next year in an effort to boost consumer spending," says Mark Chapman of H&R Block.

Meanwhile, Aussie expats will be stripped of their tax exemption for a main residence after the Australian Senate passed the Treasury Laws Amendment Bill 2019.

Expats who live overseas and own a former principle place of residence will now have two options: sell their property before the June 30, 2020, to retain either a full or partial entitlement to the Main Residence Exemption, or retain the property until they return to Australia and choose to become a resident for tax purposes.

Chapman says if you're going to live abroad for good, consider selling your home before you leave to lock in the MRE, or if you plan to return to Australia in the future, sell the home once you have become a resident in Australia again.

"Selling whilst away overseas is the worst thing you can do."

Finally, there are major changes planned to the Division 7A rules planned to start from July 1, 2020. These affect shareholders of private companies that take money out of their company without accounting for it as either wages/salary or as a dividend (for instance, if you've taken a loan from your company).

Division 7A taxes such loans or payments as an unfranked dividend unless steps are put into place to treat it as a complying loan. The changes fundamentally alter the rules around what a complying loan is and how it should be treated. If you're a shareholder in a private company and you think you might be affected, you need to be talking to your accountant now to understand the impacts on you and what you can do to be ready for the new rules.

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David Thornton is a journalist at Money magazine. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.
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