The new Labor Government handed down its October 2022/23 Federal Budget.

Overview

The Government has referred to this as a Budget that is solid, sensible and suitable for the times, with a significant focus on trying to address cost of living pressures. The announcements made in this area may not be readily obvious, as it is not a Budget loaded with cash handouts, tax cuts etc. Rather, many of the announcements were more focused on addressing structural factors in the economy that, ultimately, are aimed at reducing inflationary pressures and consequential impacts on interest rates over the longer term.

From a wealth perspective, the October 2022 Budget announcements were limited and, largely, had all been communicated prior to the formal Budget speech. The items of most relevance include the following:

Taxation

– There was no announcement of any changes to the personal income tax changes due to take effect from 1 July 2024.

– There was no announcement of an additional extension of the low and middle income tax offset that ceased from 30 June 2022.

– There was no extension of the previous cuts made to fuel excise tariffs that ceased to apply on 29 September 2022.

– For those looking to salary package a motor vehicle as part of their employment, there will be exemptions from fringe benefits tax for certain electric vehicles packaged on or after 1 July 2022.

Superannuation

– The Government has committed to relaxing the rules for self-managed superannuation funds to maintain their

concessional tax treatment when members relocate overseas. However, this will not take effect until 1 July 2023 at the

earliest.

– The ability to make a downsizer contribution to super of up to $300,000 per eligible person on the sale of a principal residence will become available to persons aged 55 and above (currently 60 and above). This will be effective 1 January

2023 at the earliest.

– No changes were announced to limit the amount that can be accumulated in super or transferred to retirement phase, providing some welcome stability to the system.

Social security and welfare

– The level of child care subsidy paid by the Government will increase from 1 July 2023, reducing the out of pocket costs for many families.

– The duration of the Government’s paid parental leave scheme will gradually extend to 26 weeks.

– The level of income a person may earn and still be eligible for the Commonwealth Seniors Health Card will increase to $90,000 for a single person and $144,000 combined for a couple.

– Other changes to benefit pensioners and income support recipients will be made, including extending the period that the proceeds from the sale of a home are exempt from the assets test by 12 months to a total of 2 years, freezing current deeming rates on financial assets and increasing the level of the Work Bonus.

It is always important to remember that at this point, most Budget night announcements are only statements of intended change and are not yet law. There may be others that impact on your personal situation, as well as other opportunities available from changes made in prior years. A WE financial adviser can help outline what these measures may mean for you, and the opportunities available now, or in the future.

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