Australians continue to struggle with cost-of-living pressures, and Federal Treasurer Jim Chalmers has now handed down the Albanese Government’s first Budget.
The proposals include increased subsidies for young families to access childcare, incentives for older Australians to stay in the workforce and assistance for regional Australians to buy their first home.
Read on for a roundup of how the proposals could affect your household expenses and financial future.
Remember, many of these proposals may change as legislation passes through Parliament. It could change because legislation passed by the Australian Parliament becomes law once the Governor-General formally accepts it. The process is known as Royal Assent.
Superannuation – budget
Encouraging Australians to downsize and increase their super – [Proposed effective date: the first 1 Jan/1 Apr/1 Jul/1 Oct after Royal Assent]
The Government is proposing to lower the age at which you can make downsizer contributions to your super from selling your home from 60 to 55. Downsizer contributions don’t count towards your non-concessional contribution (after-tax) cap, so if you are eligible and under 75, you could contribute up to $630,000 towards your super by bringing forward three years’ worth of after-tax contributions.
It is important to note that additional tax and penalties may apply if you exceed your non-concessional super contribution caps. Find out more information on super contributions caps.
Relaxing residency requirements for SMSFs – [1 July on or after Royal Assent]
Self-managed super fund (SMSF) members will have greater flexibility to retain and contribute to their fund while being temporarily overseas.
Tax – budget
‘Stage three’ tax cuts unchanged – [Proposed effective date: 1 July 2024]
| Marginal tax rate* (%) | Thresholds – income range 2022-23 to 2023-24 ($) | Thresholds – MTR* (%) and income range from 1 July 2024 ($) | |
| 0 | 0 – 18,200 | 0% | 0 – 18,200 |
| 19 | 18,201 – 45,000 | 19% | 18,201 – 45,000 |
| 32.5 | 45,001 – 120,000 | 30% | 45,001 – 200,000 |
| 37 | 120,001 – 180,000 | N/A | N/A |
| 45 | > 180,000 | 45% | > 200,000 |
| Low-income tax offset | Up to 700 | Up to 700 |
*Excluding 2 per cent Medicare Levy
Social security
Extending access to cheaper medicine for older Australians – [7 days after Royal Assent]
The Government is increasing the income test threshold for the Commonwealth Seniors Health Card.
| Current income test threshold | Proposed income test threshold | |
| Single | $61,284 | $90,000 |
| Couple (combined) | $98,054 | $144,000 |
| A couple illness separated (combined) | $122,568 | $180,000 |
Pensioners are encouraged to participate in the workforce:
1. By temporarily increasing the Work Bonus income bank – [1 December 2022 if Royal Assent before 25 November 2022, otherwise seven days after Royal Assent]
Eligible Australians will have an extra $4,000 credited to their Work Bonus income concession bank balance, with the maximum balance increasing from $7,800 to $11,800 until 30 June 2023.
The income bank offsets future income from work that would otherwise be assessable under the pension income test.
The existing Work Bonus concession of $300 per fortnight will remain unchanged.
2. By extending the qualification period for Pensioner Concession Cards – [The later of 1 January 2023 or one month after Royal Assent]
Working pensioners can keep their Pensioner Concession Card for up to two years after their pension stops.
3. By and suspending, instead of cancelling, benefits and entitlements for up to two years – [The later of 1 January 2023 or one month after Royal Assent]
If pensioners lose their entitlements due to increased income from work, they and their partners will be able to start receiving their pension again more quickly if their situation changes.
Pensioners incentivised to downsize – [The later of 1 January 2023 or one month after Royal Assent]
The Government is aiming to reduce the financial impact on pensioners looking to downsize their homes and help free up housing stock for younger families by:
- Extending the social security assets test exemption for principal home sale proceeds from 12 months to 24 months for income support recipients
- Amending the social security income test, only the lower deeming rate (currently 0.25%) to principal home sale proceeds when calculating deemed income for up to 24 months after the sale.
In particular circumstances, the measures can extend on approval for 12 months (up to 3 years in total).
Freezing of deeming rates – [Immediate]
The Government will freeze social security deeming rates at their current levels until 30 June 2024 to provide some certainty on how investment income is assessed in an environment of rising interest rates.
The lower deeming rate will remain at 0.25%, and the upper rate will remain at 2.25%.
Making medicine more affordable – [1 January 2023]
The Government will reduce the maximum general co-payment for medications on the Pharmaceutical Benefits Scheme (PBS) from $42.50 to $30 per script.
It will support people with high demand for prescription medicines due to their health needs.
Families
Enhancing the Paid Parental Leave scheme – [1 July 2023]
The Government is proposing to give families access to more leave and greater flexibility by:
- combining Parental Leave Pay and Dad and Partner Pay into a single 20-week payment
- introducing a family income limit of $350,000
- enabling either parent to claim the payment
- allowing eligible birth parents and non-birth parents to receive the payment
- allowing parents to take leave at the same time while claiming the payment.
From 1 July 2024, the Government will expand the scheme by two weeks a year until it reaches 26 weeks from 1 July 2026.
Both parents will be able to share the leave entitlement on a ‘use it or lose it’ basis, and single parents will be able to access all 26 weeks. In addition, paid parental leave can be taken in blocks as small as a day between paid work periods.
The Expanding Paid Parental Leave Fact Sheet is available here.
Increasing the Child Care Subsidy (CCS) – [1 July 2023]
The Government aims to ease the cost of living for families and reduce barriers to workforce participation by:
- increasing the maximum CCS rate from 85% to 90% for families earning less than $80,000
- increasing the CCS rate for families earning less than $530,000 in household income
- maintaining higher CCS rates (up to 95%) for families with more than one child aged five and under in care.
The Cheaper Child Care Fact Sheet is available here.
Aged care
Improving the quality of aged care
The Government is increasing funding to reform aged care, including by:
- establishing an aged care complaints commissioner, introducing new financial reporting requirements, supporting the sector in providing better food for residential and home care recipients and establishing a national registration and code of conduct for workers
- capping administration and management fees in the Home Care Packages Program and abolishing exit fees
- requiring all facilities to have a registered nurse onsite 24 hours per day, seven days a week from 1 July 2023 and increasing care minutes to 215 minutes per resident per day from 1 October 2024
- improving aged care infrastructure and services that support older First Nations people and older Australians from diverse communities and regional areas.
Housing affordability – budget
Helping regional Australians buy their first home – [1 October 2022]
The Government is establishing the Regional First Home Buyers Guarantee (RFHBG) to support eligible citizens and permanent residents who have lived in a regional location for more than 12 months to purchase their first home in that location with a minimum 5% deposit, with 10,000 places per year to 30 June 2026.
The RFHBG is part of the Home Guarantee Scheme (HGS), which also includes:
- The First Home Buyer Guarantee (FHBG), which offers 35,000 places per year to eligible first home buyers who have saved at least a 5% deposit
- The Family Home Guarantee (FHG) has 5,000 places per year and is available to a single parent with at least one dependent child who has saved at least a 2% deposit.
Improving housing supply and affordability
The Government is putting $10 billion into a new Housing Australia Future Fund for:
- Construction and repairs of housing in remote Indigenous communities
- transitional and crisis accommodation for women and children fleeing domestic and family violence and housing for older women
- housing and specialist services for veterans at risk of homelessness.
Other programs and measures include:
- establishing a ‘Help to Buy’ scheme to assist low and middle-income earners in purchasing a new or existing home using equity supplied by the Government
- funding for research into affordable housing and developing the housing supply
- Extending the social security asset test exemption for sale proceeds for pensioners who have sold a home for up to two years and capping deeming on these proceeds at the lower rate, currently 0.25%.
The Improving Housing Supply and Affordability fact sheet is available here.
Education – budget
Free technical and education courses
The Government is providing 480,000 fee-free TAFE and community-based vocational education places to give Australians access to the skills they need for future jobs.
A $1 billion one-year National Skills Agreement will deliver 180,000 fee-free TAFE and community-based vocational education places throughout 2023, with a further 300,000 places to follow from 2024.
The Skills and Training fact sheet is available here.
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