This year’s Budget has a strong emphasis on providing cost of living relief,strengthening Medicare, and investing in a stronger and more secure economy.
Inflationary pressures, interest rates and escalating costs of living have all had asignificant impact on the lives of every-day Australians.
The big-ticket items in this year’s Budget include:
• Cost-of-living relief,
• Increased Parenting Payment (Single), JobSeeker, and Youth Allowance,
• Further investment in renewable energy
SUPERANNUATION
Securing Australians Superannuation
Employers are currently required to pay superannuation guarantee contributions fortheir employees by the 28th day of the month following the end of each quarter. TheBudget proposes that from 1 July 2026, employers will be required to pay theiremployees superannuation guarantee contributions on the same day they pay theiremployees. This initiative will help to counter the underpayment or non-payment ofsuperannuation guarantee contributions, which remains a significant problem.
Pension drawdowns
In the most recent years, the minimum prescribed income to be drawn from apension account was discounted by 50% allowing pensioners to leave more money insuperannuation for retirement.
This discount was due to end from 30 June 2023 and the Budget did not include anyreference to this discount being extended beyond that date.
Transfer balance cap indexation
The general transfer balance cap is scheduled to increase to $1.9 million from 1 July2023.
The Budget was silent on any changes to the indexation of the general transferbalance cap, so we expect the cap to increase to $1.9 million from 1 July 2023.
INCOME TAX
Exempting lump sums in arrears from the Medicare Levy
This initiative, due to apply from 1 July 2024, will ensure that low-income earners don’tpay a higher Medicare Levy because of receiving an eligible lump sum payment, suchas compensation for underpaid wages.
Medicare levy low-income threshold
As occurs most years, the income thresholds applying to the Medicare Levy are toincrease from 1 July 2023. The proposed thresholds are:
SMALL BUSINESS
To provide continued support to small businesses (those with an aggregate turnoverof less than $10 million) the Government has announced a temporary increase in theinstant asset write-off threshold to $20,000. This will apply from 1 July 2023 and willcontinue until 30 June 2024.
Importantly, the instant asset write-off applies per asset so small business may beable to access this opportunity on multiple occasions.
AGED CARE
The Government has committed to spending a total of $36 billion on the aged caresector in the 2023-24 year with a focus on increased wages for aged care workers,funding to help improve the quality of care for both home care recipients and those inresidential care facilities and additional funding to implement recommendationsidentified in the Royal Commission into Aged Care.
Wages to increase by 15%
From 30 June 2023, it is proposed that a 15% increase to award wages will be availablefor many aged care workers including registered nurses, enrolled nurses, assistants innursing, personal care workers, home care workers, recreational activity officers, andsome head chefs and cooks.
Implementation of Royal Commission initiatives
Over the next 5 years, the Government will provide funding exceeding $300 million toimplement recommendations from the Royal Commission into Aged Care Quality andSafety including:
- Enhancements to the Star Rating system to improve accountability andtransparency of aged care providers,
- The development and implementation of a new, stronger Aged Care RegulatoryFramework to support the new Age Care Act which is due to commence from 1July 2024,
- Establishment of a national worker screening and registration scheme and thedevelopment, monitoring and enforcement of food and nutritional standards.
Improvements to care at home
Funding has been committed to improve in-home aged care by implementing arange of initiatives including the release of an additional 9,500 Home Care Packagesand the design, build and implementation of the new Support at Home Programwhich is proposed to commence from 1 July 2025.
WELFARE
Delivering cost-of-living relief was a key focus for the Government in this year’sbudget including reduced energy bills, reduced health costs and increases to RentAssistance for 1.1 million households.
Energy bill relief
Two initiatives have been announced to help reduce energy bills for eligible Australianhouseholds.
Firstly, the Commonwealth Government in conjunction with state and territorygovernments will provide targeted electricity bill relief of up to $500 for eligiblehouseholds. The amount that will be available will depend on which state or territoryyou live in.
To be eligible for the bill relief, you will be the primary electricity account holder andyou must also hold an eligible concession card or receive an eligible governmentpayment in your specific state or territory.
The second initiative announced was the establishment of the Household EnergyUpgrades Fund to support home upgrades that improve energy performance andsave energy, therefore providing further reductions to energy bills.
Reducing out-of-pocket health costs
From 1 July 2023, a range of measures have been announced to help reduce out-of-pocket health costs including:
- Tripling incentives for doctors to provide bulk billing,
- Investing in more bulk billing Urgent Care Clinics,
- Improving access to medicines, vaccinations and related services delivered bypharmacies.
The Government also proposes to allow 2 months’ worth of certain PBS medicines tobe dispensed by pharmacies from 1 September 2023.
Additional support to help combat rental affordability
With rental prices in most Australian locations increasing rapidly over the pastdecade, rental affordability for many, including those on Government income supportand family benefits, is a major problem.
To assist, the maximum rates of the Commonwealth Rent Assistance will increase by15%. It is projected that this will support over 1 million households including veterans,pensioners, job seekers, students and those receiving family tax benefits.
SOCIAL SECURITY
Some positive news for those receiving working age payments from Centrelink withan increase to the base rate of payment confirmed.
The Government has announced that the base rate for a range of working agepayments will increase by $40 per fortnight from 20 September 2023.
Payments that will benefit from the increase include:
- JobSeeker Payment
- Youth Allowance
- Parenting Payment (Partnered)
- Austudy
- ABSTUDY
- Disability Support Pension (Youth), and
- Special Benefit.
Older JobSeekers
To recognise the barriers that older job seekers often face when looking for work suchas age discrimination, the Government is expanding eligibility for the existing higherrate of JobSeeker to recipients 55 and over who have received the payment for 9 ormore continuous months. This higher rate (which is $92.10 per fortnight more thanthe standard JobSeeker rate) is currently available to those 60 and over.
It is estimated that this change in age will help around 52,000 eligible recipients.
Eligibility to Parenting Payment for single parents expanded
From September 2023, eligible single parents, 91% of whom are women, will receiveParenting Payment (Single) until their youngest child turns 14. Currently, theseparents are required to move to JobSeeker when the youngest child turns 8.
The current base rate of Parenting Payment (Single) is $922.10 per fortnight,compared to the JobSeeker Payment base rate of $745.20 per fortnight.
It is hoped that the improved support for single parents will provide wellbeingbenefits particularly for single mothers, who are overwhelmingly the recipients of thispayment, and their children.
The release date of this document is 10 May 2023. The content of this document is of a general nature only and does not consider your personalobjectives, financial situation and/or needs. Accordingly, the information should not be used, relied upon, or treated as a substitute for specificfinancial advice. While all care has been taken in the preparation of this material, no warranty is given in respect of the information provided andaccordingly neither DPWM Financial Advice Pty Ltd nor its employees or agents shall be liable on any grounds whatsoever with respect todecisions or actions taken as a result of you acting upon such information. Information supplied by Centrepoint Alliance Pty Ltd.