Wealth Management: What wasn't in the budget
About the author:
- Author name:
- By Terri Bradford
- Job title:
- Head of Wealth Management
- Date posted:
- 25 October 2022, 9:00 PM
The Albanese Government hands down its October Federal Budget for 2022-23 with the key theme of “building a better future”.
As anticipated, from a wealth management perspective, the ALP’s first Budget in government saw no changes to superannuation or personal income tax. Rather, some previous proposals by the former Coalition Government, such as changes to SMSFs and residency requirements, have been deferred.
Also included was the Government’s plan to ‘improve the integrity of the tax system’ by aligning the tax treatment of off-market share buy-backs undertaken by listed companies with the treatment of on-market share buy-backs.
Child care, parental paid leave, housing and aged care measures are part of the Government’s “Building a Better Future” plan in this 2022 October Budget. We summarise these proposals below.
From July 2023, Child Care Subsidy rates will increase up to 90% (from 85%) for eligible families earning less than $530,000.
- Specifically, the rate will increase from 85% to 90% for families earning less than $80,000.
- Subsidy rates will then taper down 1%age point for each additional $5,000 in income until it reaches 0% for families earning $530,000.
Families will continue to receive existing higher subsidy rates of up to 95% for any additional child in care aged 5 years and under.
Source: Cheaper Child Care Fact Sheet, Budget October 2022-23
Paid Parental Leave
The Government is investing in a 4-year plan from 2022-23 to expand the Paid Parental Leave (PPL) scheme. By 2026, families will be able to access up to 26 weeks of Paid Parental Leave.
The new scheme will include reserved ‘use it or lose it’ weeks for each parent, to encourage both parents to take parental leave. Either parent will be able to claim PPL first and both parents can receive the payment at the same time as any employer-funded parental leave. Parents are also able to take blocks as small as a day at a time, with periods of work in between.
The Women’s Economic Equality Taskforce will examine the optimal model for 26 weeks of PPL including the number of weeks that parents can access at the same time and the mix of ‘use it or lose it’ weeks.
A new Housing Accord will be established nationally to set an initial target of one million new, well-located homes over 5 years from 2024 to help tackle the challenges of housing supply in Australia.
Regional First Home Buyer Guarantee – Starting from 1 October 2022, 10,000 eligible first home buyers a year in regional Australia will be able to buy a home with the Government guaranteeing up to 15% of the purchase price of the home they are buying. This means these eligible first home buyers may be able to buy a home with as little as 5% deposit.
Defence Home Ownership Assistance Scheme – the DHOA scheme will be expanded to support veterans and Australian Defence Force members to purchase a home through monthly subsidies on mortgage interest payments.
Help to Buy – eligible home buyers will have access to an equity contribution to buy a home with a smaller deposit and a smaller mortgage. The help to buy shared equity scheme is intended to assist homebuyers to purchase a new or existing home with an equity contribution from the Government.
Asset Test Exemption & Downsizer Contributions – the exemption of home sale proceeds from pension asset testing will be extended by 12 months; and the seniors downsizer contributions will be eligible for people aged 55 to 59 (current Bill is before the Senate awaiting passage).
Additional funding will be available to the aged care sector to increase average care minutes per resident and mandate that facilities have a registered nurse on site 24/7. Better care also includes better food.
Supporting a wage increase for age care workers via a submission on the Aged Care Work Value Case to the Fair Work Commission.
Establishing a new Code of Conduct to protect care recipients and further professionalise the workforce.
SMSF Residency Measures
The Government will defer the start date for previously proposed changes to the SMSF residency requirements to allow sufficient time for the measure to be legislated.
A measure from the former Government’s 2021-22 Budget that proposed relaxing the residency requirements for SMSFs from 1 July 2022 has been delayed to the income year commencing on or after the date of Royal Asset of the enabling legislation.
Off-Market Share Buy-Backs
The Government will continue with its plan to crack down on companies using off-market share buy-backs by aligning the tax treatment of off-market share buy-backs undertaken by listed companies with the treatment of on-market share buy-backs, as part of its improving the integrity of off-market share buy-backs measure.
The change will take effect from Budget night. The Government did announce this measure will no longer be retrospective as originally planned.
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