Budget 2022: What you need to know

Last night’s budget announcement proposed a number of measures to relieve pressures on household spending, particularly for families and low-income earners. Here is our wrap-up of the key initiatives. You can also download our full summary, including key measures for business, here.

Increased tax offset for those earning less than $126,000 per year

The Government will increase the low and middle income tax offset (LMITO) for the 2021/2022 tax year, as earners in this category are more susceptible to cost of living pressures.

This proposal will increase the offset by $420, paid from 1 July 2022, when Australians submit their returns for this financial year.

Support for retirees with continuation of temporary reductions to superannuation drawdown minimums

The Government has extended the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023. Given ongoing volatility, this change will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements for tax concessions.

One-off cost of living payment for eligible social security recipients  

The Government will provide a one-off $250 economic support payment to eligible social security recipients to help with increased cost of living pressures. This includes Australians receiving the Aged Pension, Disability Support, Carer Payment and Parenting Payment, and many more.

The payment is tax-exempt and won’t count as income support for the purposes of any income support payment. It will only be available to Australian residents, and a person can only receive one payment, even if they are eligible under multiple categories.

Reduction in fuel excise to reduce pressure at the pump

With prices at the pump rising steadily, the Government has sought to reduce the price of petrol by halving the fuel excise from 44.2c per litre to 22.1c. This reduction took effect from 12.01 am on Wednesday, 30 March and should see consumers save roughly $10 on a 40-litre tank of fuel.

The reduction will continue for six months, ending at 11.59 pm on 28 September 2022. The Australian Competition and Consumer Commission will monitor retailers’ behaviour to ensure the price cut is passed on to consumers.

Enhanced parental leave payment to increase eligibility

The Government will introduce an Enhanced Parental Leave scheme. The new scheme combines existing primary and secondary parental payments to offer 20-weeks of leave paid at the minimum wage to be divided between parents as works best for the family. Single parents would be entitled to the full 20-weeks.

In addition, the income cap will change, from women earning up to $151,350 to households earning up to $350,000. The proposed changes will be introduced by 1 March 2023.

More guarantees under the Home Guarantee scheme to increase access to home ownership  

The Government will increase the number of guarantees under the Home Guarantee Scheme to 50,000 per year for three years from 2022-23, and then 35,000 a year ongoing to support homebuyers to purchase a home with a lower deposit.

With a new budget being handed down and an election looming, it’s a good time to speak to your financial adviser about how proposed changes could impact you. Get in touch with an Apt adviser today.

General Advice warning

The information provided in this blog does not constitute financial product advice or a recommendation to purchase a particular product. 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 Pty Ltd is not a registered Tax Agent. You should consider your individual situation and seek tax advice from a registered tax agent before making any decision based on the content of this document. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.