Superannuation

Extension of temporary reduction in superannuation minimum drawdown rates From 1 July 2022 The government has announced a 12-month extension of the temporary 50% reduction in superannuation minimum drawdown rates for account-based pensions and similar products to cover the 2022-23 income year.

This will apply to:

• Account-based pensions and annuities

• Transition-to-retirement pensions

• Term allocated pensions and annuities (also known as market-linked income streams).

Halving the minimum drawdown rates was originally announced as part of the response to the Coronavirus pandemic. The government stated that even though Australia has entered a period of economic recovery, there is still significant volatility in financial markets due to the ongoing impacts of Coronavirus and the war in Ukraine.

Individual tax

One-off cost of living tax offset

For 2021-22 income year only

The government will provide a one-off $420 cost of living tax offset via an increase to the existing low- and middleincome tax offset (LMITO) for 2021-22. Combined with the existing LMITO, eligible low- and middle-income earners will receive a tax offset of up to $1,500 for the 2021-22 income year. Currently, the LMITO amount is between $255 and $1,080 and is available for the 2018-19, 2019-20, 2020-21 and 2021- 22 financial years. There was no further announcement to extend the LMITO. Therefore, the LMITO is currently due to end after the 2021-22 financial year. The LMITO for the 2021-22 income year will be paid from 1 July 2022 when individual taxpayers submit their tax returns for the 2021-22 income year. The amount of offset is calculated by the ATO based on the individual’s taxable income. Based on our understanding of the announcement, the table below shows the LMITO an individual can receive depending on their taxable income:

Increasing the Medicare Levy low-income thresholds

Effective 1 July 2021 

The government will increase the Medicare Levy low-income thresholds for singles, families, and seniors and pensioners from the 2021-2022 income year. This is a routine increase and applies retrospectively from the beginning of the financial year. 

The following table compares the level of taxable income below which no Medicare Levy is payable. 

Coronavirus tests to be tax deductible

Expected to be 1 July 2021

The government restated its intention to introduce legislation to ensure that Coronavirus tests (including PCR and Rapid Antigen Tests) are tax deductible when purchased for work-related purposes. By making these tests tax deductible, it also ensures that businesses will not be subject to fringe benefits tax (FBT) on tests that are provided to employees for this purpose. This measure is expected to be applicable from the beginning of the 2021/22 tax year.

Social security

$250 Cost of Living Payment

Effective April 2022

The government will provide a once-off Cost-of-Living Payment of $250 in April 2022 to eligible recipients of the following payments and to concession card holders:

• Age Pension

• Disability Support Pension

• Parenting Payment

• Carer Payment

• Carer Allowance (if not in receipt of a primary income support payment)

• Jobseeker Payment

• Youth Allowance

• Austudy and Abstudy Living Allowance

• Double Orphan Pension

• Special Benefit

• Farm Household Allowance

• Pensioner Concession Card (PCC) holders

• Commonwealth Seniors Health Card holders

• Eligible Veterans’ Affairs payment recipients and Veteran Gold card holders.

The payments are exempt from taxation and won’t count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under two or more of the categories outlined above. The payment will only be available to Australian residents.

Enhanced Paid Parental Leave

Effective no later than 1 March 2023

The Paid Parental Leave (PPL) scheme is to be enhanced by integrating Parental Leave Pay and Dad and Partner Pay into a single scheme of up to 20 weeks leave, which can be shared between eligible parents. The aim of the enhancements is to provide more flexibility for families to decide how to best manage work and care.

The enhanced PPL scheme can be taken any time within two years of the birth or adoption of their child. The existing PPL scheme comprised two payments:

• Parental Leave Pay – paid up to 18 weeks at a rate based on the national minimum wage. This payment is currently available to the primary carer who is either the natural mother, the initial primary carer of an adopted child, or another carer under exceptional circumstances.

• Dad and Partner Pay – paid up to two weeks at a rate based on the national minimum wage to fathers and partners.

Additional Comment: This enhancement provides the opportunity for both members of a couple to have some time on PPL as the primary carer (up to a maximum of 20 weeks between them). It also allows single parents to access up to 20 weeks of PPL (extended from 18 weeks).

The income test will also be broadened to include a household income eligibility test. Currently, mothers who have adjusted taxable income up to $151,350 can access PPL even if their partner earns a high income. However, a mother who earns more than $151,350 has no entitlement to PPL even if their partner has no or low income. The income test will be broadened to include a household income threshold of $350,000 a year.

20 free Rapid Antigen Tests (RATs) for concession card holders

Effective until 31 July 2022

The Rapid Antigen Test Concessional Access Program will deliver up to 20 free RATs over seven months until 31 July 2022 to all Australians with a concession card, including Department of Veterans’ Affairs card holders.

Aged Care

Funding to implement reforms in response to the Royal Commission

Effective 2021/22 onwards

The government will provide $468.3 million over five years from 2021-22 to further implement the government’s response to the Royal Commission into Aged Care Quality and Safety. This funding is to continue ongoing reforms announced in the 2021-22 Federal Budget.

This will include spending in five key areas:

• Home care

• Residential Aged Care Services and Sustainability

• Residential Aged Care Quality and Safety

• Workforce

• Governance.

Aged Care Coronavirus response package

Effective 2021/22 onwards

The government will provide additional funding to support older Australians in the aged care sector with managing the impacts of the Coronavirus pandemic. This includes funding for the Aged Care Preparedness program that supports aged care providers to manage and prevent outbreaks.

Other

Expansion of Home Guarantee Scheme

Effective 1 July 2022

The Home Guarantee Scheme is being expanded to help more first home buyers purchase their first home. In addition, a new Regional Home Guarantee Scheme for non-first home buyers is being introduced.

Under the schemes, the government guarantees part of a home loan. This allows the purchase of a home with a smaller deposit without needing to pay Lender’s Mortgage Insurance.

Under the expanded Home Guarantee Scheme, the government will make available:

• 35,000 guarantees each year (up from the current 10,000) from 1 July 2022 under the First Home Guarantee. This supports eligible first homebuyers to purchase a new or existing home with a deposit as low as 5%.

• 10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee. This supports eligible homebuyers, including non-first home buyers and permanent residents, to purchase or construct a new home in regional areas.

• 5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee announced in last year’s Budget. This scheme assists eligible single parents with children to either buy their first home or re-enter the housing market with a deposit as little as 2%.

The Home Guarantee Scheme can be used in conjunction with other government programs like the First Home Super Saver Scheme, HomeBuilder grant or state and territory First Home Owner Grants, and stamp duty concessions.

Temporary reduction in fuel excise

From 12.01am on 30 March to 11.59pm on 28 September 2022

The government has announced that it will reduce the fuel excise (and excise-equivalent customs duty rate) that applies to petrol and diesel by 50% for six months. The excise (and excise-equivalent customs duty rate) that applies to all other fuel and petroleum-based products (including LPG and Biodiesel), except aviation fuels, will also be reduced by 50% for six months.

The government says this will result in a reduction in excise on petrol and diesel from 44.2 cents per litre to 22.1 cents per litre, which result in total savings (including GST savings) per tank of fuel of:

• $9.72 for a small hatchback with a 40 litre petrol tank

• $14.59 for a mid-sized SUV with a 60 litre petrol tank

• $19.25 for a large 4WD with an 80 litre petrol tank.

While the reduction in fuel excise applies from 12.01 on 30 March 2022, it will take several weeks for the full reduction to flow through because the excise will have already been charged on existing fuel stocks.

Safety net threshold lowered for the Pharmaceutical Benefits Scheme

Effective 1 July 2022

The Pharmaceutical Benefits Scheme (PBS) safety net threshold will be lowered, which will allow patients to reach the safety net sooner. Concessional patients will require approximately 12 fewer scripts and general patients will require approximately two fewer scripts.

On reaching the PBS safety net, concessional patients receive their PBS medicines at no cost for the rest of the calendar year and general patients receive their PBS medicines at the concessional co-payment rate, which is currently $6.80 per prescription.

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