Child Care Subsidy rates
The government is increasing Child Care Subsidy rates for families earning less than $530,000 with children in care.
From July 2023, Child Care Subsidy rates will lift from 85% to 90% for families earning less than $80,000. Subsidy rates will then taper down one percentage point for each additional $5,000 in income until it reaches 0% for families earning $530,000.
Families will continue to receive existing higher subsidy rates for their second and subsequent children aged five and under in care, up to 95%.
Improving housing supply and affordability
Implementing a housing reform agenda is a key initiative in the budget.
The government has announced a new Housing Accord which aims to bring together all levels of government as well as market participants to unlock quality, affordable housing supply over the medium term. The new Housing Accord sets an initial, aspirational target of 1 million new, well-located homes over five years from 2024.
Under the Accord, the government is committing $350 million over five years to deliver 10,000 affordable dwellings. States and territories will also support up to an additional 10,000 affordable homes. Through the combination of a more secure pipeline of supply and government support through innovative financing, the government believes this will also facilitate cost-effective investment in housing by superannuation and institutional investors.
The budget also includes announcements to help people into home ownership including:
- Help to Buy shared equity scheme – this scheme will assist homebuyers to purchase a home with an equity contribution from the Australian Government so that eligible home buyers can buy a home with a smaller deposit and smaller mortgage
- Regional First Home Buyer Guarantee – from 1 October 2022, 10,000 places are available each financial year to support regional first homebuyers to purchase a home with a deposit of as little as 5%
- The government is also encouraging older homeowners to downsize their homes to free up homes for younger families by extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. Also, by expanding access to downsizer superannuation contributions for people aged 55 to 59
The government is proposing to make changes to the Paid Parental Leave scheme, with the key focus being the extension of the scheme duration from its current 18 week period, to 26 weeks.
From 1 July 2024, the Paid Parental Leave scheme will extend by two additional weeks a year, reaching a full 26 weeks a year from 1 July 2026.
Other updates to the scheme include:
- Both parents will be able to share the leave entitlement, with a proportion maintained on a “use it or lose it” basis, to encourage and facilitate both parents to access the scheme and to share the caring responsibilities more equally
- Single parents being allowed to access the full entitlement
- Subject to eligibility criteria, both birth parents and non-birth parents will be eligible for the scheme
- Weeks of the payment will be available for parents to access concurrently, allowing them to take paid leave on the same days
- Parents being able to take government-paid leave in blocks as small as a day at a time, with periods of work in between, so parents can use their weeks in a way that works best for them
- An extension to the means testing to include a household income threshold of $350,000
The government is proposing to provide age and veterans pensioners a once off credit of $4,000 to their Work Bonus income bank.
The temporary income bank top up will increase the amount pensioners can earn in 2022–23 from $7,800 to $11,800, before their pension is reduced, supporting pensioners who want to work or work more hours to do so without losing their pension.
The government has followed through on their election promise of no adverse changes to tax measures on superannuation. Individuals, retirees, SMSF trustees and their advisers can take comfort in the fact that their superannuation savings are not being restricted or challenged – at least this time around.
As previously announced, the legislation reducing the downsizer age further to 55 is currently before the Senate and will be available from the first quarter after Royal Assent. From 1 July 2022, eligible taxpayers over the age of 60 could contribute up to $300,000 of the proceeds from the sale of their home. This measure combined with the measure to extend the assets test exemption for principal home sale proceeds from 12 months to 24 months are intended to incentivise older Australians to downsize and free up properties for families.
There were also announcements regarding measures that were proposed by the former government. The three year audit proposal has been ruled out and changes to the residency requirements for SMSF trustees has been deferred until the income year commencing on or after the date of Royal Assent of the enabling legislation.
Seniors Health Card
The income threshold for Commonwealth Seniors Health Card is to be increased from 1 July 2022 to $144,000 for couples (up from $98,054) and $90,000 for singles (up from $61,284) providing further support to older Australians to deal with cost-of-living pressures.
ATO Compliance Program – Personal Income Tax
The budget also includes an additional $80.3 million for the ATO to extend Personal Income Taxation Compliance Programs for two years from 1 July 2023. The government expects this to increase tax receipts by $674.4 million.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.