Like any pre-election budget, spending proved to be a factor as the Government balanced improvements in the labour market with headwinds still to come. Overall, no major reforms were announced, with a focus on spending and addressing cost of living concerns.
Tax receipts are expected to be stronger than initially anticipated during the pandemic with commodity prices in Australia at record highs. This has given the Government the capacity to address cost-of living-pressures with short term spending directed at low income earners, while still being able to reduce projected deficits.
We have included a summary of the key announcements below, and If you would like to discuss your personal situation, please don’t hesitate to contact our office on (08) 8172 9111.
MAJOR ANNOUNCEMENTS ARE AS FOLLOWS:
Enhancing the paid parental leave scheme:
- The Government plans to create a single scheme of up to 20 weeks, fully flexible and shareable for working parents within two years of their child’s birth or adoption. The income test will also be broadened, parents who don’t meet the individual income threshold (currently $151,350 per annum) can still qualify for payments if they meet a family income threshold of $350,000 per annum.
More affordable childcare:
- The Government’s support for childcare is easing cost‑of‑living pressures for families and supporting choices for working parents. With the removal of the annual cap on the Child Care Subsidy and increased subsidies for second and subsequent children, around 250,000 families will save an average of $2,260 per annum depending on their household income and the number of children in childcare.
One-off cost of living payment:
- From 1st July 2022, over 10 million individuals will receive a one-off $420 cost of living tax offset. Combined with the low and middle income tax offset (LMITO), eligible individuals will receive up to $1,500 for a single income household or up to $3,000 for a dual income household.
Putting home ownership in reach for more Australians:
- Under the Home Guarantee Scheme, part of an eligible home buyer’s home loan will be guaranteed, enabling Australians to enter the property market sooner with a smaller deposit. The Government is expanding the Home Guarantee Scheme to make available 50,000 places per year, more than double the current number of places available, with a new Regional Home Guarantee to be established and the number of places under the Family Home Guarantee supporting single parents to double.
Lower taxes for lower and middle income earners:
- The Government is delivering tax relief to help Australians with the rising cost of living pressures. Through the legislated Personal Income Tax Plan, an estimated $40 billion in tax relief has flowed to households since the start of the pandemic. As a result of the Personal Income Tax Plan, an individual earning $90,000 per annum (average full-time income) will benefit from a total reduction in tax of $8,655 from 2018/19 to 2022/23.
Superannuation:
- From the 1st July 2022, the Government will temporarily extend the minimum pension drawdown relief until the 30th June 2023. This will allow people to minimise the need to sell down assets given ongoing market volatility and will apply to all account-based, transition to retirement and term allocated superannuation pensions.
Savings fast track for first home buyers:
- The First Home Super Saver Scheme (FHSSS) helps Australians boost their savings for a first home by allowing them to build a deposit inside superannuation to give them a tax cut. For most people, the FHSSS can boost the savings they put towards a deposit by at least 30 per cent compared with saving through a standard deposit account. From 1st July 2022, the maximum amount of voluntary contributions that can be released under the FHSSS will be increased from $30,000 to $50,000 enabling first homeowners to achieve their dreams of home ownership sooner.
Temporary fuel excise relief:
- The Government will reduce fuel excise by 50% for 6 months (ending 28th September 2022). This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre which should save the average household around $25 per week ($1,300 per annum).
For more information or if you have any questions about your personal situation, contact our office on (08) 8172 9111 or email our friendly team today!