2021/22 Federal Budget 2021 highlights
The 2021/2022 Federal Budget focused on improving the aged care system, creating jobs, lowering unemployment rates and implementing changes to support women’s personal and economic security.
Last night, the Government announced changes to superannuation that will help increase the flexibility for older Australians, as well as support women and younger members. Below is an overview of the changes announced.
Increased flexibility older Australians
The Government announced its plans to extend the Downsizer contribution scheme by lowering the age requirement to 60 years old. The scheme currently allows eligible people aged 65 or older to make a Downsizer contribution into their superannuation of up to $300,000 (or $600,000 for a couple) from the proceeds of selling their home.
In addition, the Government has agreed to remove the work test for self-funded retirees aged 67 to 74 years old. The work test will continue for personal deductible contributions, but will be removed for non-concessional amounts. Currently, if you are aged 67 to 74 years old you have to meet a work test to be able to make extra contributions into your super account (excluding the Downsizer scheme).
Both these measures will provide greater flexibility for older people wanting to add to their super.
A female friendly budget
Women’s safety and the need to support women featured heavily in the Budget, with initiatives designed to support women returning to work.
The Government announced the introduction of other initiatives aimed at helping women and working families, these include the compulsory payment of superannuation for employees earning less than $450 per month and increased subsidies for childcare.
Increasing the superannuation rate
The stable economy has also paved the way for the Government to proceed with the legislated compulsory superannuation rate increase. Although it wasn’t announced last night, from 1 July 2021, the compulsory superannuation rate will be increasing from 9.5% to 10%.
This is part of a set of rules already in place that would see the superannuation rate change to 12% on 1 July 2025, further improving retirement outcomes for employed people.
Additional help for first home buyers
The Government has also announced an increase to the maximum amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000. This change will further help first home buyers save for a house deposit in a tax effective way, via additional voluntary super contributions.
Learn more about the 2021 Federal Budget
Although changes to the compulsory superannuation rate did not make the treasurers speech last night, from 1 July 2021, the superannuation rate will increase from 9.5% to 10%.
The Government announced an increase to the maximum amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
Last night the Government announced the extension of the Downsizer contribution scheme by lowering the age requirement to 60 years old. Currently, it is only available for eligible people 65 and over.