2021 Budget Supplement
How will the Federal Budget affect you?
During this year’s Federal Budget announcement Treasurer Josh Frydenberg stated, “Australia is back!”. The Budget proposes positive changes to superannuation, an extension of the low- and middle-income tax offsets and a boost to aged care services. Remember, these are subject to the passing of legislation:
Superannuation
The work test for older Australians
From 1 July 2022, if you’re aged 67 to 74 you will not be required to meet the work test to make non-concessional contributions and salary sacrifice contributions to super. The work test will still be required to make personal deductible contributions to super.
Downsizer super contributions
From 1 July 2022, you can make downsizer super contributions if you’re age 60 and over (currently you need to be age 65 or over).
Downsizer super contributions allows you to contribute a maximum of $300,000 (for each eligible member of a couple) to super up to the total proceeds from the sale of your home.
Superannuation for low-income earners
From 1 July 2022, if you receive employment income of less than $450 per month your employer will now be required to pay you the superannuation guarantee (SG).
Changes to the First Home Super Saver scheme
From 1 July 2022, if you’re a first home buyer you can release up to $50,000 (up from $30,000) from your voluntary super contributions to help you buy your first home.
Tax
Low- and middle-income tax offset
The low- and middle-income tax offset (LMITO) is proposed to be extended for the 2021/22 financial year. The LMITO provides a tax offset of up to $1,080 for individuals or $2,160 for a couple. The maximum tax offset of $1,080 is available to you if you have a taxable income between $48,000 and $90,000 per annum.
Small and medium business owners
If you are an eligible small or medium business owner, you will be able to deduct the full cost of eligible assets incurred between 7.30pm (AEDT) on 6 October 2020 and 30 June 2023. This was due to end on 30 June 2022.
Indexation of Medicare levy thresholds
The Government is proposing to increase the Medicare levy thresholds for singles, families, seniors, and pensioners from 1 July 2020.
Social security and housing
Increased child care subsidies
From 1 July 2022, child care subsidies paid to approved child care providers will increase, further reducing the cost of child care fees for families.
Improvements to the Pension Loan Scheme
Accessing lump sums
From 1 July 2022, you will be able to access lump sum advance payments from the Commonwealth under the Pension Loan Scheme (PLS). Up to 50% of the maximum annual rate of Age Pension can either be paid as a single lump sum or two instalments within a year.
Currently, the PLS allows combined pension and loan payments up to 1.5 times the maximum pension rate, paid fortnightly. It doesn’t allow access to lump sums. To qualify, you or your partner must own real estate in Australia that can be used as security for the loan.
Extension of First Home Loan Deposit Scheme
The Government has proposed two extensions to the First Home Loan Deposit Scheme.
Family Home Guarantee
From 1 July 2021, if you are a single parent with dependents you may be eligible to build a new home or buy an existing home with a home loan deposit of 2%.
New Home Guarantee
If you are a first home buyer looking to build a new home or purchase a newly-built home In 2021/22, you may be eligible to do so with a deposit of as little as 5% (lenders criteria apply) and you will not need to take out Lenders’ Mortgage Insurance because of guarantees provided by the Government.
Aged Care
Improving aged care
The Government’s response to the Royal Commission into Aged Care Quality and Safety is a five-year reform plan based on the following five pillars:
- Home care -an additional 80,000 Home Care Packages will be released over two years.
- Support to aged care providers to deliver better care and services, including food, through a new government-funded basic daily fee supplement of $10 per resident per day.
- Introduction of a new star rating system to highlight the quality of aged care services.
- Create a single assessment workforce to undertake all assessments that will improve and simplify the assessment experience for senior Australians as they enter or progress within the aged care system.
- Updating the Aged Care Actand establishing new governance and advisory structures.
