The 2020-21 Federal Budget and your hip pocket
The 2020-21 Federal Budget is all about job creation and economic stimulus. Presented by Treasurer Josh Frydenberg, it maps out the Federal Government’s COVID-19 recovery plan. Which aims to boost jobs and confidence until the unemployment rate is back below 6%.
Although tax cuts and infrastructure programs feature prominently in the government’s plans, there are also superannuation changes, social security payments, and aged care amendments designed to jumpstart Australia’s economy.
You can learn more via the government’s official budget website. We’ve provided a summary below.
Personal income tax changes brought forward
The Government will lower taxes for individuals by bringing forward its ‘stage two’ tax cuts. These were originally due to commence in 2022, but will now apply for the current year, back-dated to July 1 2020.
This means individuals will receive a tax cut of $255 to $2,745 depending on their annual salary, with up to $5,490 for dual income families.
|Taxable Income||Tax cut for the 2020-21 financial year|
Source: Budget 2020-21.
Changes to Superannuation
The Government announced a ‘Your Future, Your Super’ package to address Australian Prudential Regulation Authority (APRA) concerns around superannuation fees and poor performance. The four measures in this package are outlined below. They will all come into effect by 1 July 2021.
- Your superannuation follows you. A new super account will no longer be created automatically every time you start a new job. Instead, your existing super fund will follow you from job to job (unless you opt to change funds). This will avoid unnecessary fees and insurance premiums being paid on multiple accounts.
- YourSuper comparison tool. A new comparison tool will help Australians decide which super fund is best suited to their needs. It will provide ranked tables showing fees and investment returns for default MySuper products.
- Annual fund reviews. All funds will be subject to annual performance reviews. If a MySuper product is underperforming the fund will be required to tell its members. Funds that have underperformed over two consecutive years will be prohibited from receiving new members until their results improve.
- Increased accountability and transparency. Funds will be required to comply with a new duty to act in the ‘best financial interests of members’. Trustees must demonstrate that there was a reasonable basis to support their actions being consistent with members’ best financial interests.
Social Security payments
The Government will provide two separate $250 economic support payments, to be made from November 2020 and early 2021 to eligible welfare recipients and health care card holders.
Changes in Aged Care
An additional 23,000 home care packages will be provided over the next four years.
There will also be a targeted capital gains exemption for granny flat arrangements where there is a formal written agreement. The exemption will apply to arrangements with older Australians or those with a disability. These measures will take effect the following year after they're passed into legislation.
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Any figures quoted are correct at the time of writing but may be subject to change.
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