Federal Budget – What it means for your super
Here we look at some of the big announcements they made and how they might impact you and your super.
With businesses and households struggling under high inflation, rising interest rates, volatile markets, and a national skills shortage, the Government has called their 2022-23 Federal Budget “a responsible Budget that delivers targeted cost-of-living relief and invests in Australia's future”.
Priority areas include addressing the rising cost of living, investing in a stronger, more modern economy and re-targeting spending to what’s important.
While the Government made no major announcements about super, it did flag assistance for ‘downsizers’, pensioners and parents.
Key changes include:
- allowing downsizers to contribute sale proceeds to super sooner
- increasing the amount pensioners can earn before it affects pension payments
- reforms to make the Paid Parental Leave Scheme flexible
- plans to make childcare cheaper and more accessible
Let’s look at these in more detail.
Expanding eligibility for downsizer contributions
The Government will drop the minimum eligibility age for downsizer contributions from 60 to 55 years of age.
Downsizer contributions allow you to contribute $300,000 from the sale of your home into super as a one-off post-tax contribution. If you’re a couple, you and your partner can contribute up to $300,000 each. Downsizer contributions don’t count towards your non-concessional contribution caps.
This measure gives you greater flexibility about how you contribute to super. It aims to encourage older Australians to downsize sooner, thereby increasing housing availability for Australian families.
Note: the new minimum age requirements need to be passed into law before they come into effect.
Encouraging pensioners to downsize
The Government is extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. They’re also changing the income test to apply only the lower deeming rate (0.25 per cent) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.
This will help older Australians who want to sell up and downsize sooner.
Encouraging pensioners to work more
Over two years from 2022-23, the Government will give aged and veteran pensioners a one-off credit of $4,000 to their Work Bonus income bank.
This temporary top-up will increase the amount pensioners can earn in 2022–23 from $7,800 to $11,800 before their pension is reduced.
This measure aims to support pensioners who want to increase their work hours without losing their pension. It will also see more pensioners earning mandatory super (subject to age-based work tests).
Lifting the Income Threshold for the Commonwealth Seniors Health Card
Over four years from 2022-23, the Government will increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
The Government will also freeze social security deeming rates at their current levels for a further two years until 30 June 2024.
This will support older Australians who rely on income from deemed financial investments (as well as the pension) to deal with the rising cost of living.
Creating a more flexible Paid Parental Leave Scheme
From 1 July 2023, the Government will make the Paid Parental Leave Scheme flexible for families to encourage a better balance between paid work and caring responsibilities.
Under the reforms, either parent can claim the payment, and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria. Parents will also be able to claim weeks of the payment concurrently, so they can take leave at the same time.
From 1 July 2024, the Government will start expanding the scheme, adding an extra two weeks per year until it reaches 26 weeks from 1 July 2026.
Both parents can share the leave entitlement, with a proportion maintained on a “use it or lose it” basis. Sole parents will be able to access the full 26 weeks.
It’s important to note that you cannot earn super under the Paid Parental Leave Scheme.
A plan for cheaper childcare
The Government will introduce a range of measures to make childcare more accessible and affordable.
Proposed measures include:
- lifting the maximum childcare subsidy rates for families earning less than $530,000
- introducing a base entitlement to 36 hours per fortnight of subsidised early childhood education and care for families with First Nations children, regardless of activity hours or income level.
The Government estimates these reforms will increase the hours worked by women with young children by up to 1.4 million hours per week in 2023–24. This is the equivalent of 37,000 full-time workers.
Proposed start date: 1 July 2023
Tackling housing affordability with a new Housing Accord
The Government will launch a new Housing Accord to help state, territories, local governments, institutional investors (including super funds), and the construction sector to work together to build new, affordable homes and ease the housing affordability crisis.
The Accord sets an aspirational target of one million new, well-located homes to be delivered over 5 years from mid-2024.
Under the Accord, the Government will provide $350 million over 5 years, with ongoing availability payments over the longer term, to deliver an additional 10,000 affordable dwellings. States and territories will also support up to 10,000 affordable homes, increasing the number of houses delivered under the Accord to 20,000.
Proposed start date: 2024
For a full budget breakdown, visit the Government’s official Budget website.