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What Is In The Federal Budget? A Wealth Architects Summary
The Federal Budget released what it refers to as a “solid and sensible Budget, suited to the times we are in and the conditions we confront” late in October.
The Australian federal budget for the 2022-23 financial year has been delivered, and it’s clear that this is not a budget loaded with cash handouts or tax cuts.
Like most Federal Budgets, the devil is in the detail and it’s always important to remember that many of the measures included in the Budget are not yet law and must still pass through the Legislative process in Parliament.
There is a strong focus in this Budget on trying to relieve cost of living pressures by addressing structural factors in the economy.
So, what’s actually in the budget?
Check out our summary of the key points below:
Summary – What does this budget say about our economy?: The budget is warding off a weak economy before the next real budget. GDP has decreased from 3.25% to 1/4% this financial year, and it will drop to 1.5% by 2023/24. To make matters worse, wage growth is only at 2.6%, while inflation is predicted to jump up 7.75% in the December quarter, and a cost of living increase will be 6.1%. We won’t see any real growth in wages until 2024.
Taxation: No changes were announced to the personal income tax that was set to take effect on July 1st, 2024, or for the extension of the low and middle-income tax offset ending June 30th,2022. However, fringe benefits will be exempt from taxes for certain electric vehicles bought after July 1st ,2022.
Superannuation: The Government has promised to change the rules for self-managed superannuation funds so they can keep their concessional tax treatment when members move overseas. But this won’t occur until 1 July 2023 at the earliest. Downsizers aged 55 and over can contribute up to $300,000 per person to their superannuation on the sale of their principal residence from 1 January 2023. No changes were announced to limit the amount accumulated in super or transferred to the retirement phase, providing some welcome stability to the system.
Social Security and Welfare: Starting from July 2023, the Australian government will gradually raise the level of childcare subsidy paid to families. This will help reduce out-of-pocket costs and extend the government’s paid parental leave scheme to 26 weeks.
If you are a single person, the level of income you may earn and still be eligible for the Commonwealth Seniors Health Card will increase to $90,000. If you are in a couple, the combined level of income you may earn and still be eligible for the card will increase to $144,000. Other changes that will benefit pensioners and recipients of income support include extending the period during which proceeds from selling a home are exempt from assets tests by 12 months (to 2 years in total), freezing current deeming rates on financial assets and increasing Work Bonus levels.
What Else Is In the Budget?
Some of the most notable measures include $20 billion to upgrade Australia’s electricity grid to connect with renewable energy sources; a National Housing Accord which aims to build one million new houses over five years from 2024; more TAFE and university places; and reforms to childcare and paid parental leave. There will also be cheaper medicines and support for communities impacted by natural disasters.
If you want to better understand how the budget might affect your personal situation, get in touch with Wealth Architects today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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Wealth Architects provide quality trusted financial advice to over 1,500 clients, nationally. Regardless of what stage in life you are at, our qualified and experienced Financial Planners are able to provide you with advice and guidance to help you achieve your goals. We ensure we take the time to listen to you to understand what’s important in your life. Every individual is different, which requires a plan and strategy that is uniquely designed to suit you. This is how the name Wealth Architects was born. With decades of combined experience our approach is holistic, ethical and thorough. We leave no stone unturned in our process and we sweat the small things, so you don’t have to.
Who we help:
A Wealth Architects Adviser can ensure you are extracting sufficient funds from your business into your personal life. This will ensure your hard work is achieving your personal goals – not just your business objectives.
If you are looking for strategies to increase your net wealth, Wealth Architects advisers are experts in accelerating your financial position via proven strategies.
Having a road map before you decide to retire is extremely important. Ensuring your ducks are in a row will put you in the best position to ensure you have sufficient capital when you decide to retire. capital when you decide to retire.
Wealth Architects advisers will ensure your assets are well balanced & structured right for your ongoing income stream.
How we can assist:
Strategy Analysis – Everything we do boils down to giving you the highest probability of achieving the life that you want to live. That’s why we spend a lot of time researching, analysing and preparing financial projections before we put pen to paper.
Cashflow & Budgeting – Cashflow is the lifeblood of any financial plan and we use a very simple structure to maximise your ability to save.
Debt Management – There is good debt and bad debt. We work to accelerate the repayment of bad debt and use good debt where it’s appropriate to increase the probability of achieving your goals.
Tax Planning – Tax is inevitable; however, it can be reduced by effectively structuring your assets and income.
Investment Management – We are unbiased to property, shares or even cash in the bank. All have their place, but what we care about is implementing an investment strategy that you understand, are comfortable with and is aligned with your goals.
Superannuation – It’s generally the most tax effective vehicle to store and accumulate your wealth, and hence it is a fundamental part of our strategy. Choosing the right fund is not just about fees and performance, it’s about understanding your objectives and how much control you would like.
Retirement Planning – Retirement is a significant financial milestone and getting clarity around your retirement goals is just as important as getting the strategy right. In this process we will answer 3 simple questions: How much money do you need? Where will your money come from? How long will this last?
Planning for the Unexpected – Things don’t always go according to plan and when they don’t, it pays to have a safety net. We put a protection strategy in place that you can depend on in the event you, your spouse or your key staff are unable to work due to injury, illness or death.
Estate Planning – It’s important to ensure that your wealth is transferred effectively and in accordance with your wishes, and not anyone else’s. It’s also important that you have someone you trust to make decisions for you if you can’t make them yourself.
Social Security – You have paid tax your whole life, so we work hard to review and maximise your entitlements with Centrelink.
Aged Care Strategies – Planning the move into aged care can be stressful whether it’s for you or your family members. We can minimise this stress by helping you make informed decisions based on sound advice.
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