2022 Budget Recap
Last night the Federal Government handed down it’s annual budget prior to the upcoming May 2022 election. The budget announced some incentives designed to stimulate the economy, while aiming to also ease certain cost-of-living pressures at the same time. Given the nature and excitement (lack thereof) of the reading of the budget, I thought I would continue my annual tradition of summarising the key elements of the budget in a more ‘digestible’ fashion. This year’s budget was a little different to previous years, with a much lower focus on changes to superannuation, social security, aged care and childcare, and an increased focus on easing the pressures associated with day to day living. Some of the key elements of last nights budget are;
Personal Income Tax
The Government has announced that for the current financial year, in an attempt to alleviate some of the pressures of the costs of living, the Low and Middle Income Tax Offset of $1,080 will be increased by $420 to a flat $1,500. This means that if you’d previously qualified for the tax offset, when you come to do your annual tax return later this year, you will have access to a higher tax reduction than previous, with the attempt to try and put more money back in the pockets of those eligible. This is a one-off increase, so I wouldn’t rely on it sticking around indefinitely.
Extension of Reduction to Minimum Drawdown Rates
The Government has announced last night that they have extended the 50% reduction in the minimum drawings from superannuation income streams for a further 12 months, continuing until 30 June, 2023. The focus behind this is to offer retirees more flexibility on the annual drawings in light of market and economic volatility. This is a package that has turned out to be of extreme value to retirees, and I know of many who have capitalised and benefited from not having to draw their pre-covid minimum drawings.
One-Off Cost of Living Payment
In a further attempt to ease the cost of living pressures on households, the government will also be making a one-off payment of $250 to social security and concession card holders. This includes, but is not limited to, those receiving Centrelink payments (aged pension, disability pension, parenting payment, carers payments, Jobseeker, youth allowance etc.), pension concession card holders, commonwealth senior citizen health card holders and certain veterans affairs recipients.
Fuel Excise Reduction
Given the recent rise in fuel prices as a result of the European conflicts, the government will be halving the excise duty rate that applies to petrol and diesel for 6 months. This is temporary, targeted and starts effective immediately. The goal of this is to be able to reduce current fuel prices by at least 22 cents a litre. This should be seen at the bowser within the next fortnight, and the government has asked the ACCC to ensure that retailers pass on this reduction in full.
Increase in access to Home Guarantee Scheme
With the recent (and extreme) rise in house pricing in Australia, the Government has announced that it will extend the number of deposit guarantees being offered to first home buyers for the next 3 years. Under this program, buyers are able to purchase a property with only a 5% deposit, with the government guaranteeing the other 15% for eligible first home buyers. This has seen many first home buyers be able to source and purchase a property sooner, so the government hopes with this measure to ease more pressure on first home buyers in the future.
While the budget itself contained additional measures, the above listed are the points and benefits that I believe will have the biggest impact on everyday Australians. Of course, all of the above measures must pass parliamentary process, but I wouldn’t expect there to be too many objections on the measures.
There are always going to be people saying that the Government should be doing more to ease the costs of living, however the above shows that the Government has recognised, considered and addressed measures as an attempt to reduce at least some of the pressures felt by people in their day-to-day lives.
As always, I am available to discuss any of the above measures and more in detail at any stage, so please don’t hesitate to contact me!
The information provided in this post must only be considered general advice. It has been prepared without taking into account any persons individual objectives, financial situation or needs. Before acting on anything in the article, you should consider its appropriateness to you, having regard to your objectives, financial situation and overall needs.