Create the life you want
On the evening of the 29th of March 2022, the Government handed down the 2022-23 Federal Budget. It should come as no surprise that the major focus of this Budget for most Australians is on the cost of living.
With inflation levels and the cost of many goods rising, be that from the effect of natural disasters or the costs of fuel rising due to international events, or a combination of these, wage indexation has simply not kept pace. One of the key announcements from the Government in this area was a halving of the fuel excise (equivalent to 22.1c per litre) for the next six months, with effect from 30 March 2022.
Cost of living tax offset (LMITO)
It was forecast as a “cash splash” Budget, and for some this may prove to be true. Low- and middle-income earners, which are defined for budget purposes as people with taxable income of $126,000 or less, will benefit in the current financial year with an increase in the low and middle-income tax offset by a further $420, to a new maximum level of $1,500. However, the benefit will not be available until you lodge your 2021/22 income tax return as this is a non-refundable offset that reduces the amount of tax otherwise payable.
Superannuation
From a superannuation perspective, the Budget was extremely quiet. The minimum payment requirements from superannuation income streams (private pension accounts) will remain halved for 2022/23.
With no announcements on the superannuation guarantee, it would appear super guarantee contributions will increase to the legislated 10.5% from 1 July 2022, as already planned.
For Chrysalis clients, there is an opportunity to explore what changes may be relevant to you, not only from this year’s Budget, but also from the announcements made last year around superannuation, that have now been legislated to take effect from 1 July 2022.
These include:
- The ability to make downsizer contributions to super from age 60 (previously it was age 65).
- The removal of the work test requirement for non-concessional contributions until the client turns 75.
- The limit on the maximum amount in voluntary contributions that can be made into super under the First Home Super Saver Scheme has been increased from $30,000 to $50,000.
- The ability to receive super guarantee without needing to earn at least $450 in a month.
Focus on women
This year’s Budget has continued with a strong focus on measures for women, particularly from a health perspective, with a number of new pharmaceutical products included in the Pharmaceutical Benefit Scheme, significantly reducing their cost.
The Medicare levy low-income thresholds have been increased for seniors, pensioners, families, and singles from 1 July 2021.
Social security recipients
Many social security recipients will be eligible for a one-off $250 cash bonus in April, with this measure expected to pass through Parliament this week to ensure it can be paid and is not subject to an election outcome.
Small business
Small businesses gain further relief on the amount of future PAYG instalment payments, and incentives to invest in training for staff and cloud-based solutions with deductions for up to 120% of the actual cost.
Affordable Housing and Home Ownership
The Government will increase the number of guarantees under the Home Guarantee Scheme to 50,000 per year for 3 years (from 2022-23) and then 35,000 a year thereafter. The Government believes this will support homebuyers to purchase a home with a lower deposit. Part of this package will enable single parents to buy a home with a deposit of 2% and first homeowners with a deposit of 5%.
It is always important to remember that at this point, the Budget night announcements are only statements of intended change and are not yet law.
A Chrysalis financial adviser can help outline what these measures may mean for you, and the opportunities available now, or in the future. Please feel free to reply to this email or call the office on 02 9972 2633 to discuss any questions you might have.
