How the 2022-23 Federal Budget may affect you

The 2022-23 Federal Budget was recently announced. Here is a summary of the proposed changes that may affect you and your super from 1 July 2023.

 

Superannuation

Pension drawdown cap to remain halved for another year
The government has extended the 50 per cent reduction of the superannuation minimum drawdown requirement for account-based pensions and similar products for a further year to June 30, 2023. The minimum drawdown requirements determine the minimum amount of a pension that a retiree must receive as pension payments from their superannuation to qualify for their tax concessions.

Drawdown rates range from 4% to 14% depending on age. The extension of the halved rate will continue to halve these rates to 2% to 7%.

This helps pension members, who do not necessary need all their minimum drawdowns, to continue to receive it at a reduced rate, avoiding the need to withdraw excessive amounts while investment markets are volatile.

Superannuation Guarantee increase to go ahead

While not strictly in the budget a critical area that was not changed in the budget is the legislated increases to the Superannuation Guarantee. This means that working Australians will see their employer made SG payments increase from 10% to 10.5% on 1 July 2022. Furthermore, this rate is scheduled to continue to increase in 0.5% increments each year over the next 3 years until the rate reaches 12%.

Super contributions on government parental leave

Unfortunately, paying super contributions on government parental leave was not introduced. While much was said in the media about the potential inclusion, in the week leading into the budget the federal Treasurer confirmed that the government would not be including the addition of superannuation payment on the government paid parental leave.

Christian Super, like most superannuation funds, believe a move to introduce this is important to help reduce the superannuation gender pay gap. Superannuation contributions are paid on all other types of employer paid leave, including on annual leave, sick/carers leave, long service leave and as such parental leave stands out as an exception that we believe should be removed.

 

Other Budget Announcements

Below we have included a small selection of other announcements in the federal budget that are likely to benefit members outside of super.

Temporary reduction in fuel excise

As a result of the conflict in Ukraine, Australian’s have seen a significant increase in the cost of fuel. In response to this sharp increase the government is temporarily halving its fuel excise (from 44c per litre to 22c per litre) for 6 months. While we hope and pray for a speedy resolution of the conflict in Ukraine this budget measure will be welcome relief for everyday Australians when filling up their cars. Furthermore, this will hopefully also provide some respite for the transport industry reducing the need to pass on cost increases to consumers.

Low and Middle income tax offset

To help with the increasing cost of living, low- and middle-income earners will receive an extra $420 back on their tax. This coupled with the existing low- and middle-income tax offset will mean that eligible individuals will now receive up to $1500 back on their tax. For couples this could be up to $3000 from July 1 this year.

Paid parental leave scheme

The Government is introducing a single Paid Parental Leave scheme which integrates the existing Paid Parental Leave scheme with the Dad and Partner Pay. The single scheme will apply equally to family units or single parents and provides 20 weeks of paid parental leave to be used how the household sees fit. In addition, the Government is broadening the income test to include household income up to $350,000 per year. This also means eligible single parents will be able to access an additional two weeks of Paid Parental Leave.

Home Buyers

The government is proposing to expand its existing first home buyers’ scheme, where people only need to have a 5 per cent deposit to buy a house without the need for lenders mortgage insurance (LMI). It is expanding the scheme to 35,000 places a year (previously it was 10,000 places a year). However, they have also introduced new eligibility rules to ensure the program get used by those most in need.

Furthermore, they are creating a new regional housing scheme with 10,000 annual places. This scheme will commence from October 1 for first home buyers or people who have not owned property in the last five years (including permanent residents) and is aimed at encouraging construction in regional areas. To access this scheme people must either build or buy a newly built home in a designated regional area.

The budget is also proposing to extend the Family Home Guarantee scheme which aims to help single parents buy a house (either their first house or to re-enter the property market). The scheme means eligible people only need to have a 2% deposit to buy a house without the need to pay LMI. This scheme will now cover 7,500 places. Previously it only covered 2,500 places.

Pension recipients

The Government proposes to provide a one-off, tax-exempt payment of $250 to eligible pensioners, welfare recipients, veterans, and concession card holders. It will be paid automatically to 6 million people at a cost of $1.5 billion. More than half those who will receive this are pensioners.

Small Business Tax incentives

The government is proposing a scheme allowing small businesses to claim 120 per cent of the cost of laptops, cloud computing and other services to help them “go digital”. Along with a similar scheme allowing small businesses to claim 120 per cent of the cost of any external staff training course.

 

Questions?

Feel free to contact our Member Care Team who are here to assist you with any questions you might have about your account and the Federal Budget changes. Alternately, if you’d like to read in further depth about the federal budget changes, you can click here for information directly from treasury.

Disclaimer: The information provided is general information only and does not take into account your personal financial situation or needs. You should obtain financial advice that is tailored to your personal circumstances. You should consider all the information contained in the PDS before making a decision about investing in Christian Super. The information is correct as at the issue date and is subject to change. Information which is not materially adverse is subject to change and may be updated from time to time. You can find updated information on our website or by contacting the Member Care Team or contacting the ATO.