Federal Budget 2022-23
What is the Federal Budget?
Essentially, it's like your household budget, but for the whole of Australia.
Every year the Government looks at how much money it has coming in through taxes and other charges and how much money it wants to spend on things like wages, welfare, projects, and services etc.
How the budget is balanced will have an impact on every Australian through the cost of goods, taxes, support payments, super and lots more.
The proposed budget is debated in parliament and must be passed into law before any changes come into effect.
The budget is normally done in May, but this year has been done early due to the upcoming election.
What's in the 2022-23 Budget?
This year's budget focused on measures to address the rising cost of living and includes new tax offsets for low- and middle-income earners, a one-off cost of living payment, and changes to the paid parental scheme.
All of this is designed to ease pressure in face of global conflicts, housing affordability, market uncertainty, rising inflation, and reduced pandemic support measures.
Here are some of the Budget proposals that may affect super members and pensioners.
Low to Middle Income Tax Offset
The Government will introduce a $420 cost of living tax offset for low- and middle-income earners for the 2021-22 tax year. This is linked to the existing tax offsets and thresholds.
Impact on you: Eligible low- and middle-income earners may receive a tax break of up to $1,500 for a single income household or up to $3,000 for a dual-income household.
Turn a tax break into a super boost
If you put your $1,500 budget tax savings into super with a net annual return of 7% over ten years, you’d boost your super by around $3,000. Over twenty years, that boost jumps to over $6,000. Not a bad way to start saving for that dream holiday
Cost of living payment
The Government will provide a one-off, tax-exempt payment of $250 to 6 million eligible pensioners, including welfare recipients, veterans, and concession cardholders.
Impact on you: If eligible, you’ll get $250 in your bank account tax-free.
Start date: April 2022
Paid Parental Leave Scheme
The Government is combining the existing Paid Parental Leave scheme with the Dad and Partner Pay.
Families and single parents will have 20 weeks of paid parental leave to be used how they see fit, regardless of ‘primary’ or ‘secondary’ caregiver status.
The Government is also broadening the income test to include household income up to $350,000 per year.
Impact on you: Parents can divide the 20 weeks Paid Parental Leave between them. Single parents can access an extra two weeks of Paid Parental Leave. However, you still won’t be paid any super while taking Commonwealth backed Paid Parental Leave.
Proposed start date: No later than 1 March 2023
Home Equity Access Scheme
The Pension Loans Scheme was renamed the Home Equity Access Scheme, and its eligibility criteria was expanded to include Aged Pensioners who own a home.
Impact on you: You may be able to use your home as security for a loan to supplement your retirement income.
Start date: 1 January 2022
To see full details of all budget measures, go to budget.gov.au
Changes to super
Unlike previous years, the Government made no major announcements about super in the 2022-23 Budget.
The only change which was announced prior to the budget was the extension of the 50 per cent reduction of the minimum drawdown rate for account-based pensions until 30 June 2023.
This rate sets the minimum amount pensioners must draw from their super each year and was temporarily reduce in 2021 as part of the Government’s COVID-19 economic response.
For pensioners, the reduced rate means you can withdraw less from your super pension account than generally required, giving you greater flexibility about how and when you access your super.
Things that are staying the same
While the budget included few changes to super, it’s also worth noting what hasn’t change.
This year saw no changes to how super is taxed or to the concessional and non-concessional contribution caps.
There was also no change to the planned increase for the Superannuation Guarantee.
Currently, the guarantee is set to rise 10.5 per cent on 1 July 2022 and continue increasing by 0.5% every year until it reaches 12.0% from 1 July 2025.
That means more super for you and your retirement.
The planned boost to the First Home Super Save Scheme announced in the 2021-22 budget is also going ahead.
From 1 July 2022, potential first home buys can save up to $50,000 for a home deposit in super. This is up from the current limit of 30,000.