During this year’s Federal Budget announcement Treasurer Josh Frydenberg stated “Australia is back!”. This years Federal Budget announced positive changes to superannuation, an extension of the low and middle income tax offsets and a boost to aged care services.
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.
The work test means you have been gainfully employed for at least 40 hours in 30 consecutive days during the financial year of the contribution.
The announcement also proposed that individuals aged 67 to 74 will also be able to access the non-concessional bring-forward arrangement. This is subject to contribution cap eligibility.
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 from the proceeds of selling your home.
From 1 July 2022, if you have a self-managed super fund (SMSF) or small APRA fund (SAF) with old complying pensions (including term allocated or market-linked pensions) you will be able to exit these legacy pensions. For some SMSFs the cost of running these pensions has been more than the actual pension they receive.
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.
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.
This applies to businesses with an aggregated annual turnover or total income of up to $5 billion.
The Government is proposing to simplify the individual tax residency rules, replacing the existing ‘resides’ test with a ‘183-day’ test. This test is similar to residency tests in place for New Zealand and the United Kingdom.
Under this test, anyone who is physically present in Australia for at least 183 days during a financial year will be taken to be an Australian tax resident.
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.
The Government’s response to the Royal Commission into Aged Care Quality and Safety is a five-year reform plan to include an additional 80,000 Home Care Packages, increased government support for aged care providers, a new star rating system to highlight the quality of aged care services.
For more information on the Federal Budget proposals please visit www.sfg.com.au/budget2021