I am sure you have all been bombarded with emails and updates on the latest Federal Budget. In this article, I have picked out some of the changes that I think could impact you directly. Infrastructure funding is nice to know about, but it probably won’t directly affect you.
The first measure I have selected is the Downsizer Contribution to superannuation. Currently, if you are 60 years old, have owned your home (in Australia) for at least ten years, and have not previously made a Downsizer Contribution, you can contribute up to $300,000 into superannuation from the proceeds of the sale.
What has been announced in the Budget is an adjustment to the eligibility to make a Downsizer Contribution, reducing the minimum age from 60 to 55 years. The beauty of the Downsizer Contribution is that it does not count towards any of the contribution caps; however, it will count towards your transfer balance cap, so while the contribution may be in the superannuation environment, it could potentially not form part of the tax-free ‘pension phase’ component.
With the downsizer contribution, you have up to 90 days from settlement to make the contribution (with an accompanying form to the superannuation provider before or at the same time as the contribution).
At the moment, the Budget announcement is not law. It was introduced to the House of Representatives on the 3rd of August and is currently in the Senate. Hopefully, it will receive Royal Ascent soon to become part of your future planning.
Commonwealth Seniors Health Card
Many will be interested in the income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples. Once again, this is not legislated yet, but once it has been, it would be worth talking to your Adviser to see if it is worth applying, as the benefits can be substantial over time.
More of a nice to know at this point, as there can always be movement in this space. The Labor Government is supportive that from 1st of July 2024, people earning between $45,000 and $200,000 will pay tax at a marginal rate of 30%. The existing tax bracket between $120,000 and $180,000 will be removed to facilitate this. This is not a fait accompli, as we know in the land of politics and tax, things can change very quickly.