The new financial year is here. It is a crucial annual milestone that signals the start of a new beginning and a new term for Australians.
With the pandemic at its peak last year, we were generally protected against price increases through measures implemented by the government. However, this year is different. Costs are going up significantly in all areas of life. Personal budgets and finances may need to be looked at carefully and adjusted to match the changes that are coming.
With the new Australian Federal Budget announced, new policies are poised to come into effect. These policies may have a bearing on your personal finances – income and wages, healthcare and insurance, and even the cost of your next holiday or cup of coffee.
In this latest blog post, we have listed all you need to know to be prepared for a successful 2021-22. We have covered all the highlights – from superannuation to tax and Medicare.
1. Super to rise
The federal law dictates the minimum amounts that the employers must contribute to their employees' super accounts, on top of standard wages or salaries.
This financial year, working Australians will receive a 0.5% increase to their superannuation fund. The new legislation will see the super increase from 9.5% to 10% from 1st July, and then rise 0.5% every subsequent year until it reaches 12% by 2025.
2. Increase in super contribution limits
Concessional contributions are defined as those contributions that are made into your super fund before tax is paid. On the 1st of July, the super contribution “caps” or limits are increasing from $25,000 to $27,500. The annual non-concessional contribution cap is also set to increase from $100,000 to $110,000.
3. Other changes to super
Previous legislation ruled that - workers who earned less than $450 a month were not entitled to receive their superannuation. This policy has been revised. Under the new policy, no matter how much (or little) you earn, you are still entitled to super.
This change is meant to take effect on 1st July provided the legislation is given royal assent. The previous threshold saw twice as many women as men miss out on a super contribution while working in casual and/or part-time positions.
4. Tax returns
You may be about to receive a handy tax break, with as much as $1080 available to taxpayers of low- and middle-income tax bracket. The low- and middle-income tax offset is available to all taxpayers with an income of up to $126,000. This policy is expected to benefit over 10 million Australians.
5. Medicare rebates
The MBS or Medicare Benefits Schedule is a list of medical services that the government subsidises through Medicare. Around 900 MBS items are set to change after a review that occurred between 2015 - 2020.
Changes are expected to be announced which affect medical procedures including – general surgery, orthopaedic surgery and cardiac services. According to early estimates, this will lead to significant savings in cost for each patient.
6. Tax reprieve for small and medium businesses
For small and medium businesses that have an annual turnover of less than $50 million, the corporate tax that they have to pay will now drop to 25%.
Initially, businesses were expected to pay 27.5% tax when the policy was first introduced. By 2020, that number had been brought down to 26% and now it is being brought down further to 25%.
If you have questions regarding our article, please do not hesitate to contact us. At Oakmont, we aim to simplify all aspects of financial planning. With over 60 years of cumulative experience, you can count on our professional advice to ensure you make the most of your superannuation savings. We specialise in the areas of corporate and individual superannuation.
We provide tailored financial services that take your special and unique needs into consideration, supporting you properly from beginning to end. Call us for an obligation-free consultation, today. We’re here to help.
General Advice Disclaimer
The information contained on this website and in this blog post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly and, where appropriate, seek professional advice from a financial adviser.
Although every effort has been made to verify the accuracy and correctness of information, Oakmont Financial Group, together with our consultants, officers, agents, and employees, disclaim all liability for any loss or damage suffered by any persons directly or indirectly relying on this information.