Federal Budget Summary
On the 11th of May, treasurer Josh Frydenberg delivered his third and maybe his most important federal budget. Australia has emerged from the pandemic relatively unharmed. This year’s budget aims to reinforce that resilience through economic growth and stimulation.
Referred to as the ‘pandemic budget’, this year’s federal budget saw major changes around aged care, health, infrastructure, tax changes and superannuation shifts. These changes are made with the goal of reducing tax strain for individuals and businesses. As a result, it aims to drive down unemployment and support consumer confidence.
Please see our summary below on some of the key highlights, if you have any questions, we are happy to help!
Tax Flexibility and Clarity
- Low and middle-income tax offset (LMITO) is to be kept for 2021/2022. The LMITO is a tax rebate of up to $1,080 offered to low and middle-income earners. Taxpayers with a taxable income of between $48,000 and $90,000 are eligible for the maximum offset of $1,080. Those with taxable income of between $90,000 and $126,000 are also eligible, on a reduced scale.
- Also, Taxpayers will now be able to self asses the effective lives of certain intangible depreciating assets. This includes items such as patents, registered designs, copyrights, and in-house software.
- In addition, the government will provide capital funding to the ATO to build an online system. It’s goal will be to increase transparency and reporting clarity for not-for-profits claiming income tax exemptions.
- From 1st of July 2022, corporate income derived from Australian medical and biotechnology patents will be taxed at a concessional effective corporate tax rate of 17%
Josh Frydenberg delivering the 2021-22 Federal Budget in Government house
Aged Care Security
- Access to lump sums under the pension loans scheme. This is a reverse mortgage type loan provided by the government, designed to assist retirees to boost their retirement income. This will be done by unlocking equity in their Australian property. Older Australians can receive regular fortnightly payments, with payments accruing as a debt against their property.
- In response to the Royal Commission into Aged Care Quality and Safety, the government is investing $17.7 billion over the next five years to improve the aged care sector.
- Further, a new star rating will be implemented. This will allow aged care recipients and their families to compare aged care providers on performance, quality, and safety.
- The downsizer contributions age has been reduced from 65 to 60. This will allow an after-tax contribution of up to $300,000 per person when the family home is sold.
- Also, this year’s budget removes the current $450 per month minimum income threshold. These workers will now have Superannuation Guarantee paid by their employer.
- In addition, from July 2022, individuals up to the age of 74 years old will be allowed to make or receive non-concessional or salary sacrifice super contributions without meeting their work test.
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