Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)

Workers may be getting a little excited about the prospect of a tax cut in next week's federal budget to help with their cost of living pressures, but new figures suggest it is retirees who may need a greater helping hand.

Consumer confidence, according to one survey, has risen for three straight weeks heading into next Tuesday's budget where personal income tax cuts are expected to be its centrepiece.

The consumer price index, which measures a basket of goods and services, rose just 0.4 per cent in the March quarter for an annual rate of 1.9 per cent, below the Reserve Bank two to three per cent target band.

They gauge how much after-tax incomes need to change to allow different types of households to purchase the same quantity of consumer goods in a given period.

The bureau blames this on a 2.8 per cent increase in education fees at the start of the new school year and a 1.1 per cent rise in transport costs through rising petrol prices.

However, age pensioner households are deemed to have a greater reliance on health products and services, which rose 5.5 per cent in the March quarter.

Overall, pensioners would have seen a cost of living increase of 0.8 per cent over the quarter, double the quarterly rate of CPI.

(Australian Associated Press)

Australian taxpayers will be spared a future tax hike as the Turnbull government scraps an $8 billion increase to the Medicare levy.

The increase, a signature measure of the 2017 federal budget, was aimed at covering the costs of the National Disability Insurance Scheme.

"All planned expenditure on the NDIS will be able to be met in this year's budget and beyond without any longer having to increase the Medicare levy," he will tell business economists on Thursday.

The treasurer will again accuse Labor of leaving a $57 billion shortfall in NDIS funding when it left office.

"We no longer believe we need to do this."

Labor had proposed to restrict the 0.5 per cent Medicare levy increase to those earning more than $87,000.

(Australian Associated Press)

More than a third of Australians are treading water financially, with many struggling and often running out of money for food or bills, new research shows.

The ANZ's latest financial wellbeing snapshot, released on Thursday, reveals only about a quarter of all Australians have "no worries" when it comes to money.

Of those, 13 per cent are "struggling" and often run out of money for food or bills.

Restaurateur and artist Miranda Scherger considers herself one of the "lucky" ones.

"I was living in Melbourne for a few years and got myself into a lot of debt," Ms Scherger told AAP.

Ms Scherger now thinks she's doing "okay" financially.

After paying off the bulk of her debt, Ms Scherger falls in with the 40 per cent of Australians who say they are "doing okay".

That means how people feel about their money situation right now and going forward.

"I don't have a huge amount of debt," she said.

The International Monetary Fund says the global economy is enjoying its strongest performance since the start of the decade.

In its latest World Economic Outlook released on Tuesday, the IMF says the global upswing that began in mid-2016 has become broader and stronger, led by faster growth in the Euro area, Japan, China and the US.

The IMF stuck to its most recent world growth forecast of 3.9 per cent for both this year and next.

It now sees Australia growing at three per cent in 2018 compared to its previous 2.9 per cent prediction made in February, while keeping 2019 at 3.1 per cent.

The unemployment rate was 5.6 per cent in February.

It also says interest rates may need to rise more quickly than expected if excess demand emerges, which would stress highly indebted countries, firms, and households.

Melinda Bendeich, Manager, Technical Advice at ClearView

In the 2017 Federal Budget last May, the Government proposed a number of superannuation changes to improve housing affordability.

It announced the First Home Super Saver Scheme (FHSSS), aimed at helping young people enter the property market by enabling them to partially access their superannuation for a home deposit.

It also announced a 'downsizer contribution' to encourage Australians 65 years old and over to sell their home and invest for retirement, with the aim of 'freeing up' more properties for the younger generations.

These two initiatives are now law.  This article examines each benefit in detail and illustrates how they may be beneficial for your clients.

First Home Super Saver Scheme (FHSSS)

The FHSSS allows individuals to effectively save for their first home inside superannuation. From 1 July 2017, FHSSS voluntary contributions of up to $15,000 per year and $30,000 in total can be made into superannuation and these contributions, plus deemed associated earnings, can be withdrawn by first home buyers or builders.

The Government estimates that this could boost house deposit savings by up to 30 per cent given the tax benefits of using pre-tax dollars for contributions and the low 15% tax on super earnings (not to mention the potential for higher returns in super compared to standard deposits in bank accounts).

To be eligible for the FHSSS, your clients must be over age 18 and must never have owned any property in Australia. However, if they are jointly purchasing a property with someone who has previously owned property, the FHSSS is still available as it is individually tested.

The Australian Taxation Office (ATO) is administering the scheme and advising super funds on how much can be released after taking into account contributions tax. Once your client has obtained a contract to buy or build their first home, they have 12 months to request the release of FHSSS contributions.
Withdrawals will generally be taxed at your client's marginal tax rate, however, a 30 per cent tax offset will apply.  Importantly, withdrawals will not be assessable by Centrelink or the Department of Veterans' Affairs and there will be no impact on payments such as Family Tax Benefits.

Downsizer contributions

Australians aged 65 and over who sell the family home to free up equity to fund their retirement will be able to make additional super contributions of up to $300,000, from 1 July 2018.

This benefit can be utilised by both members of a couple for the same home, resulting in a total possible contribution of $600,000 per couple.It will apply where the contract for the sale of the home is entered into (exchanged) on, or after, 1 July 2018.

Contributions made under this legislation will not count towards other super caps.Additionally, no work test or age restrictions apply, however, you clients must have owned their home for at least 10 years and it must be their principal residence.

It's important to be aware that your clients may risk losing some or all of their Age Pension. While the family home is exempt from the Asset Test, the additional $300,000 super contribution will be an assessable asset.

Finally, to be eligible to make a downsizer contribution, there is no requirement to purchase a new home.This may provide retirement planning opportunities that were not previously available to those over 65 years of age and retired.