The new financial year has brought with it several key government policy changes which have impacted areas including pension and carer payments, cost of medicines, tax, superannuation, and property.
So what are the key changes and how might you be affected?
Cost of living & the Low and Middle Income Tax Offset
This is the last year taxpayers can make use of the Low and Middle Income Tax Offset (LMITO), which will cease at the end of this financial year (30 June 2023). In it’s final year, it has been increased by a one-off $420 ‘cost of living tax offset’.
For those who are employed in the workforce, the proportion of wages your employer must contribute to your superannuation has increased from 10% to 10.5% and will continue to increase by half a percent per year until it reaches the final target of 12% by 2025.
While many employers will pass this on as an increase to your pay, there are some employers who may choose to cover the additional costs by deducting this from your take home pay instead.
The rules vary, depending on whether you are paid a salary plus super or a total package including super – so if you see your pay has been reduced, check your contract and get in touch with the Fair Work Commission.
Downsizing and super
As of 1 July, if you are over 60 and are downsizing, you may be able to contribute up to $300,000 from the proceeds of the sale (or part-sale) of your primary residence into your superannuation fund.
Previously, this scheme was only open to people aged 65 years and older.
There are two conditions attached to this scheme:
The home must be based in Australia and owned by you or your spouse for at least 10 years. The disposal must also be exempt or partially exempt from the capital gains tax.
You haven’t previously contributed proceeds from downsizing to your super from the sale of another home or part-sale of your current home.
Learn more about the scheme via the ATO website.
If you’re thinking about downsizing, the new National Seniors Downsizing Calculator can help you get a better idea of how much it will cost and how much you could potentially contribute to your super.
Home Equity Access Scheme
The Home Equity Access Scheme (formerly known as the Pension Loans Scheme) is a government scheme which allows homeowners to draw on the equity in their home to boost their income.
Nationals Seniors pushed hard for changes to this scheme over the past few years and a result, the scheme has been rebranded as the Home Equity Access Scheme with a lower interest rate of 3.95% in January 2022.
Two additional changes have now come into effect as of 1 July 2022:
Those taking part in the scheme can now get an advance payment of the loan if they need a lump, which may reduce the fortnightly loan payments for the next 26 fortnights.
A new no negative equity guarantee has also been introduced for scheme recipients, which means they won’t have to repay more than the equity in the property when repaying the loan.
Pharmaceutical & loan benefits
The Pharmaceutical Benefit Scheme (PBS) Safety Net thresholds have been lowered for concession card holders and non-concessional patients as of 1 July 2022:
Concession card holders: The threshold is now $244.80 (down from $326.40). Once the threshold is reached, they will not have to pay anything for PBS medicines for the remainder of the calendar year.
Non-concessional patients: The threshold has been lowered to $1,457.10. Once the threshold is reached, they will only pay the concessional co-payment of $6.80 for PBS medicines for the remainder of the calendar year.
If you combine your family's PBS amounts, you may be able to reach the threshold sooner. Learn more here.
Pension & Carer payment threshold changes
As of 1 July, one million pensioners and carers will benefit from annual increases in the areas, limits, and deeming thresholds that are free from means testing. This increases the amount of income or assets somebody on the Age Pension, Disability Support Pension or Carer Payment can earn or have before their payment is affected.
The assets test threshold used to determine when you lose the pension has increased by:
$9,500 for a single homeowner
$14,000 for a homeowning couple
$17,500 for a single non-homeowner
$22,000 for a non-homeowning couple.
Deeming rate thresholds used to determine your deemed income from your assets have also increased. Assets up to the threshold attract the lower deeming rate of 0.25% and any above the threshold are deemed to earn a higher 2.25%. As of 1 July 2022, the deeming threshold for a single pensioner is now $56,400 (up from $53,600) and for couples the threshold is $93,600 (up from $89,000).
More details on the new payment rates and thresholds are available on the Department of Social Services website.