The Labor Party, led by Anthony Albanese, has won the 2022 Federal Election. During the election campaign Labor made several election commitments to entice voters. Labor’s commitments included, but were not limited to, changes to social security and superannuation. Below is a summary of key of the proposed reforms, and the opportunities which they present.
Freezing deeming rates
The Government has stated that it is committed to freezing deeming rates from 1 July 2022 until 1 July 2024. Deeming rates are used to calculate an assumed rate of income based on your financial assets. Consequently, if deeming rates are kept on hold it has the potential to benefit those who receive an income tested pension. Current deeming rates and thresholds are shown below:
|0.25%||First $53,600||First $89,000|
|2.25%||Above $53,600||Above $89,000|
Increasing eligibility for the Commonwealth Seniors Health Card (CSHC)
The CSHC is available for self-funded retirees who are ineligible for an Age Pension, if they meet the associated income test. The Government has proposed to increase the income test so that more Australian’s can access the CSHC. Under this measure it is estimated that an additional 50,000 Australian’s will be eligible for the CSHC. Proposed changes are summarised in the following table:
|Current||Proposed from 1 July 2022|
Extending the exemption on home sale proceeds
Currently, if you sell your home the proceeds you receive are exempt from the asset test for 12 months for social security purposes. The exemption only applies to the portion of the proceeds intended for use for a new primary residence.
The Government has proposed to extend the exemption from 12 months to 24 months. This will provide social security recipients with more flexibility and time to plan ahead when selling their home.
Expanding the Home Downsizer Contribution
The outgoing Liberal Government recently legislated a change to the Home Downsizer Super Contribution. This change reduces the age at which a super fund member can use this contribution from 65 to 60. From 1 July 2022, the Government want to lower the age further from 60 to 55. If legislated, this change extends several contribution and strategic opportunities to an even greater number of individuals.
As always, there are important conditions and requirements that need to be met before applying these financial strategies. If you think the above proposals could impact you, ensure you get in touch with our office and make the most of the opportunities available.
Information in this article is of a general nature only and has not been tailored to your personal circumstances. Information in this article reflects our understanding of relevant regulatory requirements and laws etc as at the date of issue, which may be subject to change. Please seek personal advice prior to acting on this information.