As the pandemic recedes, this Budget was always going to be an interesting one, and there was much speculation as to how the Morrison Government was going to address current and future challenges. There are significant new measures and changes, some expected and some less so.
Here’s a summary of what you need to know.
Continued relief for low and middle income earners, but no change to personal tax rates
The Low and Middle Income Tax Offset (LAMITO) remains, providing continued relief for earners in this category, but there is no change to personal tax rates. There was some speculation that tax cuts proposed for 2024 would be brought forward to 2022, however, this did not come to pass.
More help for young families with expensive childcare fees
Childcare can be a significant household expense, and can, in some cases, be more than income earned. The Budget removes the $10,560 cap on the Childcare Subsidy for all families and increases available subsidies for families with more than one child aged under five in care, by 30%, up to a maximum of 95% of eligible childcare fees.
Support for first home buyers
The Government will offer an additional 10,000 places on the popular First Home Loan Deposit Scheme that enables first home buyers to access finance without the full 20% deposit. Further, the Government will provide measures for 10,000 single parents to access home loan finance with as little as a 2% deposit.
Changing super contribution rules
The Government has put a number of measures in place to help Australians who are retired or nearing retirement to increase their superannuation. These include:
- Allowing Australians aged 67-74 to make or receive non-concessional or salary sacrifice super contributions, subject to existing contribution caps, without meeting the work test.
- Reducing the eligibility age for downsizer contributions from 65 to 60 years of age, a change that will take effect after Royal Assent of the enabling legislation, which is expected to take place before 1 July, 2022.
For Australians in the workforce, the monthly minimum earning before superannuation is paid has been abolished. This could significantly increase superannuation balances over time for low income earners and those who have to reduce their workforce contribution for a period of time, for example new parents or those looking after elderly relatives.
Changes to the aged pension loan scheme to support retirees
The Pension Loan Scheme enables retirees to borrow funds to supplement their retirement income, held against property they own. It is designed to avoid retirees having to sell off the family home to cover the costs of living. Previously, it was paid as regular, small payments across the year. This year’s Budget has amended that, allowing for two lump-sum payments in a given year, which may help retirees to cover bigger expenses, such as required repairs to the family home.
New, clearer tax resident laws for expats
The Government will replace the individual tax residency rules with a new, modernised framework. A person who is physically present in Australia for 183 or more days in any income year will be an Australian tax resident.
Extension of instant asset write-off for small businesses and self-employed
The instant asset write-off for small businesses and self-employed will continue until at least July 2022, supporting businesses to purchase eligible assets and write off the full amount in the tax year, rather than depreciating them over time.
Of course, whether and how you should make use of these measures depends on your personal circumstances and goals. One of the ways your Apt Adviser can support you is by ensuring you make best use of any government initiatives or entitlements that apply to you, so get in touch with your adviser to discuss what Budget 2021/2022 could mean for you.
If you are not already an Apt client, get in touch to find out how an Apt Wealth adviser can help you live for today while planning for tomorrow.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.