Published: 13 May 2021
Post-pandemic economic recovery - themes of the 2021-22 Federal Budget
After 2020’s “Pandemic Budget”, the focus of the Morrison Government’s 2021-22 Budget Announcement was on maintaining and growing economic recovery. Whilst Superannuation wasn’t a key item last year, this year’s Budget saw some pleasing measures in providing flexibility around Superannuation that we believe are positive for both working and retired members.
We’ve focused on the key proposals which are likely to affect our members in this year’s Budget. These announcements are proposals only and are yet to be passed by Parliament.
Abolishing the work test for retirees
In welcome news for retirees, the work test will be abolished on 1 July 2022, meaning retirees aged between 67 and 74 can add to their super without having to satisfy any test. Currently, concessional or non-concessional contributions can only be made for those who are employed for at least 40 hours in a consecutive 30-day period during the financial year in which the contribution was made.
You’ll find details on contributing to super here or call us on 1300 436 374.
Removing the $450 Super Guarantee threshold
The announced proposal will see part-time workers benefit from the removal of the $450 per month minimum income threshold for Superannuation Guarantee payments. All employees will be paid the Superannuation Guarantee by their employer regardless of their income. This is subject to legislation however, it’s an important step forward to help boost the superannuation balance of part-time workers.
Expansion of the First Home Super Saver
With housing affordability a hot topic in this low interest rate environment, the announcement of the change to the First Home Super Saver (FHSS) will help to reduce pressure on first time home buyers. If the proposal is approved, the maximum releasable amount of voluntary concessional and non-concessional contributions will be increased from $30,000 to $50,000, subject to a maximum of $15,000 contribution into super for any one financial year. This will provide first home owners with greater opportunity to achieve their goal of purchasing their own home.
If you’d like further details, on FHSS visit our summary here or call 1300 436 374.
Changes to the Downsizer Scheme
In more welcome news on the flexibility around superannuation, from 1 July 2022, the age for eligibility for the downsizer scheme will be lowered from 65 to 60. The proposal will see members aged 60+ who meet all eligibility requirements, able to contribute up to $300,000 to their super following the sale of their home, whilst couples can contribute $300,000 each.
For further details on eligibility and how you could take advantage of this scheme call us on 1300 436 374.
Tax relief for individuals
Tax payers, for another year, will benefit from tax relief aimed at driving the economic recovery as part of the second stage of the Personal Income Tax Plan. The Government announced it will extend the low and middle income tax offset (LMITO) to the 2021-22 financial year. What does that mean for you? If you earn less than $90,000 you’ll receive a reduction in tax up to $1,080.
Tax relief for small and medium businesses
A tax rate reduction from 30% to 25% will be introduced from 1 July 2021 for small and medium businesses. Temporary full expensing has also been extended to 30 June 2023 allowing the full value of any eligible depreciable asset up to $150,000 to be written off in the first year of installation.
Aged Care initiatives
The Government’s response to the Royal Commission into Aged Care will be welcomed by those considering Aged Care options for themselves or family members. The initiatives proposed will see $17.7 billion allocated to governance, regional access, homecare, residential aged care quality, safety, services and sustainability as well as on training and up-skilling aged care workers. Initiatives also included an additional 80,000 home care packages as well as further subsidies for aged care residents’ bills with the government to pay an additional $10 per resident.
The Budget included an announcement of $506 million to be spent on providing 163,000 training places in industries of critical importance over two years. As part of the JobTrainer Fund, the aim is to up-skill members of the workforce, particularly younger and those under-employed.
Superannuation Guarantee Contributions
This year’s Budget didn’t include details on the legislated superannuation guarantee schedule, however this is positive news for members with the 0.5% increase to 10% SG contributions set to go ahead on 1 July 2021. Industry bodies have long advocated for the increase in SG contributions so we’re pleased this increase remains on track.
Find out more
You’ll find the details regarding all of the announcements in the Government’s Budget website. Just remember that these announcements are proposals only and are yet to be passed by Parliament.