July 13, 2023 Emily Ryan

Noteworthy changes coming into effect this new financial year

 

The new financial year officially began on July 1st and there are several changes that have come into effect that will impact individuals, businesses, and the economy. We have outlined a few of the noteworthy changes here:

Increase to Aged Pension qualifying age

The qualifying age for the Government aged pension is increasing to 67 (previously 66 years and 6 months) from July 1st. If you were born on or after 1st January 1957 you must be 67 to be eligible for the aged pension. You can submit your application 13 weeks before you reach the Aged Pension age. Read more on the Services Australia website here.

Superannuation increase – the super guarantee

From July 1st 2023 the super guarantee rate is 11% (up from 10.5%). Further increases of 0.5% are scheduled each financial year until 2025 when the rate reaches 12%. More details can be found on the ATO website here.

Energy bill relief

The government is partnering with state and territory governments to deliver up to $3billion of electricity bill relief for eligible households and small businesses. From July 2023, this plan will deliver up to $500 in electricity bill relief for eligible households and up to $650 for eligible small businesses. Details and eligibility requirements for each state and territory can be found here.

Paid Parental Leave scheme changes

From the 1st of July 2023, there has been a consolidation of the Parental Leave Pay and Dad and Partner Pay into a single payment. It has increased from 90 days (18 weeks) to 100 days (20 weeks), assuming a 5-day work week. These 20 weeks can be shared amongst the birth or adoptive parents (with the birth mother or first adoptive parent’s approval) to best suit their family needs. Single parents can access the full 20 weeks. The modifications provide a more inclusive and flexible approach for families.

If you do not meet the existing individual income test of earning less than $156,647 in the 2021-22 financial year or $168,865 in the 2022-23 financial year a family income test has been introduced. You may be eligible for the Parental Leave Pay if you and your partner’s adjusted taxable income is less than $350,000 in the applicable financial year. The Services Australia provides a full summary here.

Increase to superannuation transfer balance cap

The transfer balance cap will increase from $1.7m to $1.9m, effective July 1st, 2023, due to indexation. This cap is the maximum amount (when you reach your preservation age) you can transfer from your super account (where your money is invested while you’re working) to your pension account (where you can access and use your money in retirement). Details can be found here on the ATO website.

Total super balance cap increase

The total amount of money you have in your superannuation and retirement accounts as of June 30th each year is referred to as your total super balance (TSB) and from July 1st, 2023, the TSB limit will rise from $1.7 million to $1.9 million.  If your super balance goes beyond the TSB threshold, you won’t be able to make any additional non-concessional contributions in the next financial year without surpassing the cap for non-concessional contributions. Read more on the ATO website here.

Increase to government co-contribution threshold

The co-contribution scheme implemented by the government aims to support individuals with lower incomes in saving for their retirement. Under this scheme, eligible recipients receive an additional boost of up to $500 towards their superannuation. Starting from July 1st, 2023, the total income threshold for the co-contribution will be raised from $42,016 – $57,016 to $43,445 – $58,445. Head to the ATO website to find out more.

Cheaper childcare

Starting from July 10, 2023, families earning less than $530,000 will receive an increased Child Care Subsidy (CCS). The percentage of CCS you are eligible for is determined by your family’s income.

The income threshold to qualify for the maximum CCS will be raised. Families earning up to $80,000 will now receive an increased maximum amount of CCS, going from 85% to 90%.

For those earning over $80,000, the subsidy may begin at 90% and decrease by 1% for every $5,000 of additional income earned by the family. This means that your subsidy amount may either increase or remain the same, depending on your circumstances.

If you have multiple children aged 5 or under, it is still possible to receive a higher rate of subsidy for one or more of your children.

If you are currently receiving the CCS these changes will be applied automatically. The Services Australia has the full summary of changes here.

 

 

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