Need to know

Outlined below are all the latest news you 'need to know'.

 
Issue What it means  What do you need to be thinking about?
Treasury
Federal Budget

The Treasurer, Josh Frydenberg, delivered the 2022/2023 Federal Budget on 29 March 2022. 

The following resources may assist:

Australian Taxation Office             
The Australian Taxation Office (ATO) releases new 2022/2023 super rates and thresholds

The ATO has released several important superannuation rates and thresholds for the 2022/2023 financial year.

There will be no change to either the concessional or non-concessional contribution cap limit. 

Key changes includes an increase in the CGT cap amount, low rate cap, untaxed plan cap amount and others.

It may be necessary to update superannuation recommendations for the new financial year in the context of these rate thresholds and other changes from 1 July 2022.

In addition, it may be necessary to update affected assumptions in any financial modelling tools.

Social Security and aged care
New Centrelink rates and thresholds released.

Many Centrelink rates and thresholds were updated on 20 March 2022. 

 

It will be necessary to apply these new rates and thresholds when estimating Centrelink entitlements from 20 March 2022.

New Aged Care rates, thresholds and subsidies have been released.

Many Aged Care fees and charges were indexed on 20 March 2022. The Department of Health have also released subsidies and supplements that apply from 20 March 2022.

Client fees relating to residential Aged Care and Home Care may change from 20 March 2022.

In addition, the maximum permissible interest rate for residential aged care will increase on 1 April 2022 to 4.07%. For current and past interest rates see here.

The Department of Human Services will review and update residential Aged Care and Home Care fees effective 20 March 2022.  

The quarterly review is a reconciliation process which: 

  • aligns the fees a care recipient pays with the fees associated with their care needs and changes to their financial circumstances 
  • incorporates any indexation into the fees that care recipients are asked to pay (usually in March and September each year)
  • includes any changes made during the quarter that relate to an historical event (eg the sale of an asset within a previous quarter that the Department has not been notified of until a later date). 
The effective dates of the four quarterly reviews are 1 January, 20 March, 1 July and 20 September - which means the next review will be on 1 July 2022.
Enacted legislation
Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022
On 3 March 2022, regulations were made to remove the work test requirement for personal contributions and salary sacrifice contributions. The change comes into effect from 1 July 2022. 

This means clients between ages 67 and 74 will be able to salary sacrifice and make personal contributions such as NCCs, personal injury contributions, CGT cap contribution without satisfying the work test or work test exemption.

The work test or work test exemption still needs to be satisfied for those intending to claim a tax deduction, where the individual is aged 67 to 74 (contribution to be received no later than 28 days after the end of the month the person turns age 75).
For more detailed information about the changes to the work test and complementing super opportunities please see our recent article new super opportunities from 1 July 2022
Bills that have passed both houses and await Royal Assent
Social Services and other Legislation (Pension Loans Scheme Enhancements) Bill 2021
The Bill will allow borrowers to take up to two lump sums in advance from 1 July 2022 and introduces a protection measure being a no negative guarantee meaning the borrower or estate can only be held liable for up to the value of the property.

The feature of the Pension Loans Scheme is that borrowers can remain living in their family home without having to sell their property and they do not have to repay the loan during its term.

Retaining their home may carry Centrelink concessions such as main residence exemption and may have sentimental and estate planning advantages.

Treasury Laws Amendment (Cost of Living Support and other measures) Bill 2022

The Bill will give effect to many of the measures announced in Tuesday’s Federal Budget such as the: 

  • $250 cost of living payment
  • Increase in the low and middle income tax offset
  • Reduction in the Fuel Excise Tariff
  • Amendments to the Employee Share Scheme
  • Amendments to the Medicare Levy and Medicare Levy Surcharge income thresholds.

For further commentary on the Federal Budget and what it means for your client please see our:

 

More information

If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.

Disclaimer
The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.