2024-25 Federal Budget Recap 

2024-25 Federal Budget Recap 

Centrelink, Economy, Superannuation, Tax

In his 2024 Federal Budget speech, treasurer, Jim Chalmers, announced that ‘The number one priority of this government and this Budget is helping Australians with the cost of living’.  But what exactly does that mean?   Let’s take a closer look at what the 2024 Budget proposes –   An average tax cut of $1,888 in 2024-25  The budget proposes significant tax relief for ALL Australian taxpayers to alleviate cost-of-living pressures, including reduced tax rates, adjustments to the income thresholds, and increased low-income thresholds for the Medicare levy.   This measure aims to boost disposable income and encourage economic activity by allowing Australians to retain more of their earnings.  $300 back in the pocket for ALL Australian Households  To combat rising energy costs, the government has allocated $3.5 billion for a one-time $300 energy bill rebate for all Australian households, designed to directly reduce headline inflation by about 0.5 percentage points in 2024-25 without adding to broader inflationary pressures.  This initiative also extends to one million small businesses, receiving a $325 rebate.  Superannuation contributions on paid parental leave  The 2024 budget integrates enhancements to parental leave and childcare into comprehensive support for families. It includes a $1.1 billion investment to extend superannuation contributions to government-funded Paid Parental Leave, improving financial security for new parents.   Additionally, the budget boosts childcare support, aiming to make childcare more affordable through increased subsidies, reducing the financial burden on families and supporting parents’ return to work.   These measures are part of a broader effort to provide more robust support for families and promote gender equality.  $3 billion in student debt… wiped  In an effort to alleviate the burden of education costs, the budget proposes a change to the way the government calculates HELP debt indexation, erasing $3 billion in student debt for over 3 million Australians.   An investment in education for Australians  The budget commits to reforming tertiary education and increasing vocational training funding, aligning skills training with market needs.   Specifically, it allocates $88.8 million to provide 20,000 new fee-free TAFE places, including pre-apprenticeship programs relevant to the construction industry.   Additionally, the government is introducing Commonwealth Prac Payments to support students undertaking mandatory placements, offering $319.50 per week to more than 73,000 eligible students, which includes those in fields like nursing and social work.   This investment is part of a broader effort to align skills training with labor market demands and support sectors critical to economic growth.  Supporting small businesses  To aid small businesses, the 2024 budget extends the $20,000 instant asset write-off for an additional year, enabling continued investment in necessary business equipment. This extension is designed to enhance the cash flow of small enterprises and encourage further economic activity among local businesses.   Additionally, the budget includes investments to support the mental and financial well-being of small business owners, recognising the unique challenges they face and bolstering the resources available to them for sustainable operation.  Access to affordable medicines  The budget allocates up to $3 billion to reduce the maximum PBS co-payments. This includes a one-year freeze on the maximum patient co-payment for everyone with a Medicare card and a five-year freeze for pensioners and other concession cardholders, ensuring that no pensioner or concession card holder will pay more than $7.70 for PBS-listed medications until 2030.  … And an increase to health funding  The budget allocates $888.1 million to expand mental health services. This includes funding for new and existing programs that provide critical support for individuals facing mental health challenges.    An additional $2.2 billion is directed towards improving the aged care system, and investments are made in strengthening Medicare with a focus on urgent care clinics, reducing hospital admissions, and supporting regional and remote health services.  This expansion aims to provide wider access to necessary health services, significantly improving health outcomes and making healthcare more affordable and accessible to more Australians.  A 10% increase to Commonwealth Rent Assistance  In response to the housing affordability crisis, the budget increases Commonwealth Rent Assistance by 10%, benefiting nearly 1 million households. This follows a 15% increase from the previous year, marking a substantial boost to aid renters, especially given the rising rental market costs.  Housing affordability  The government is investing $6.2 billion in new housing initiatives to tackle affordability and accessibility.   This funding supports the construction of more homes, including affordable and social housing options, addressing critical housing shortages and supporting community infrastructure development.   The 2024-25 Federal Budget is strategically focused on alleviating financial pressure through targeted support measures. By understanding and applying these benefits, Australian households can better navigate the challenges of rising living costs.  For tailored advice on how to adjust your financial plan in light of the new budget measures, consider consulting with a financial adviser or accountant. They can help you understand the specific impacts on your personal finances and strategise accordingly.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

The challenges of being a Carer

The challenges of being a Carer

Updated on Aged Care, Budgeting, Centrelink

Caring for a loved one can be deeply fulfilling but brings its fair share of challenges too – as Laura discovered.   When her mother Shelly had a stroke, she didn’t require a nursing facility, but could no longer live alone.   Laura was working part-time while studying a Bachelor of Dental Surgery and dreaming of one day opening her own boutique dental practice. She assumed that moving home to care for Shelly wouldn’t greatly affect her career plans, and, in fact, giving up her rental accommodation would save money.  Unfortunately however, Shelly had had to quit work so the pair only had Laura’s wages to live on. Yet the bills kept coming in, and on top of everyday living costs, expenses such as medicines, transportation and modifications to the home soon added up.  Additionally, helping Shelly attend medical appointments and assisting with errands put Laura behind in her studies. Since Shelly’s condition was not going to improve, Laura deferred her course; telling friends she’d return later.  A great emotional weight settled on Laura’s shoulders as she automatically prioritised her mother’s day-to-day needs above her own.  As expected, Shelly’s condition worsened. Medical sessions often clashed with Laura’s work commitments leaving her no option but to give up her job as well.  While expecting to support her mum physically and emotionally, Laura wasn’t prepared for the financial hit.  Fortunately, the Australian government offers a range of financial assistance packages, such as:  Applicants must meet prescribed criteria and the amount of payment varies depending on the situation.  The Government website www.servicesaustralia.gov.au contains a wealth of information for carers, including eligibility criteria, entitlement estimation calculators and information on how to claim.  Shelly’s doctor provided program leaflets and additional details, and helped Laura gather the medical paperwork and other relevant documents.  For Laura, giving up her job impacted more than just her finances. Having already lost friends after too many declined invitations, she now lost her last source of social interaction.   Resigning herself to a life of care, Laura abandoned all thought of returning to university, along with her dreams for the future.  It was around this time that Laura discovered Carer Gateway www.carergateway.gov.au and Carers Australia www.carersaustralia.com.au.   These websites provided valuable carer resources, information and assistance services. While recognising that financial relief was crucial, their emphasis was on the relevance of self-care, urging carers not to underestimate the importance of their own well-being, particularly their physical and mental health.  Laura found a community of people who understood her situation, and a network of support groups, counselling services and respite programs encouraging carers to balance their care-giving responsibilities with their own needs.   One of Laura’s new friends suggested she seek legal advice around Powers of Attorney, and a financial adviser specialising in estate planning for both her own and Shelly’s peace of mind.  These days Laura says she feels the world opening up as the silence around caregiving is broken. With her mother’s illness, her life took an unexpected turn, yet it has expanded in other ways. Laura’s future is looking brighter; she has even enrolled in an online dental assistant course.  Not exactly what she’d originally planned, it’s nevertheless a pathway to her own future, and more than that, she’s daring to dream again.  The information provided in this article is general in nature only and does not constitute personal financial advice.  

Federal Budget 2023-24 Summary

Federal Budget 2023-24 Summary

Updated on Centrelink, Economy, Superannuation, Tax

Lady Luck has once again looked down fondly upon Australia, creating the first Federal Budget surplus in 15 years, through a higher tax take on record export earnings and increasing income tax receipts from higher job numbers. But how long will the good times last? Domestic economic growth is expected to buckle under the weight of higher interest rates. As a result, annual gross domestic product is expected to fall to just 1.5 per cent in 2023 -2024, recovering slightly to just 2.25 per cent the following year. This low growth forecast, down from 3.25 per cent currently, comes despite an expected surge in immigration numbers to 300,000, while inflation is forecast to stay stubbornly close to the 6 per cent mark for 2022-2023. The Budget papers suggest inflation will eventually fall within the Reserve Bank‘s guidelines, but not for some time, raising the possibility of stagflation engulfing economic growth. At the same time, unemployment is expected to rise from its record low level of 3.5 per cent to 4.5 per cent the following year and remain at this level for the foreseeable future. Nonetheless, this is a true Labor Budget. The Federal Government will boost Job Seeker payments by $40 a fortnight, provide greater rent assistance and energy subsidies to low-income households, as well as lower medicine costs and provide cheaper doctor visits for all Australians. Increased wage payments for those working in the aged care sector and increased childcare subsidies should also help to reduce the pressure on working families struggling to deal with the recent uptick in cost-of-living pressures. An estimated 60,000 single parents will also be able to claim the Single Parent welfare payment benefit from September 1, with the Government lifting the eligibility age for the youngest child in a family from 8 to 14 years. The Government insists these measured spending increases are targeted and restrained and will work to reduce the rate of inflation. However, only time will tell if the Reserve Bank agrees that a lift in overall government spending via the Budget will work to bring down prices. The Government hopes to reduce housing pressures by encouraging investment in rental housing by lowering the annual profit on build-to-rent projects from 30 to 15 per cent. But beyond this, this Budget has very little to help struggling businesses. It does, though, include some $4 billion to encourage new green energy programs, including $2 billion to support large-scale hydrogen production and $1.3 billion to help households upgrade their existing homes through the Household Energy Upgrades Fund. At the same time, big-ticket items within the Budget just get bigger. There is a brave estimate that spending within the NDIS will be restrained, yet there is no actual strategy for achieving this other than to reduce waste. The cost of providing health services has never been higher, while defence spending is expected to surge to $20 billion over the next four years, including some $9 billion to be spent on the new AUKUS nuclear-powered submarines. Little has been done to boost Government revenue beyond more fairly taxing windfall profits in the gas industry and increasing the tax bill for super accounts with more than $3 million in assets. Beyond this, nothing has been done to address the structural challenges within the Budget. Meanwhile, there is already unrest that the Job Seeker allowance is not being increased sufficiently to pull recipients out of poverty, with cost of living pressures at record highs for Australia’s most vulnerable people. All at a time when the Budget is in surplus.   The information provided in this article is general in nature only and does not constitute personal financial advice.

How does Australia’s pension plan stack up?

How does Australia’s pension plan stack up?

Updated on Aged Care, Centrelink, Retirement

One in six people will be over 65 years old by 2050. With the world’s population ageing quickly, it is natural to think about how pension systems around the world will cope, particularly in Australia. Fortunately, Australia’s three-component retirement income system means our age pension system is well-equipped to support older Australians now and well into the future. Is Australia’s age pension adequate for retirement? Comparisons of age pensions around the world are generally made based on three key factors — adequacy, sustainability and integrity. The balancing act is tough, but essential for countries to get right. It is no use having an overly generous age pension if the current funding measures (typically tax revenue) aren’t adequate to maintain the system long-term. Integrity is also critical, ensuring an age pension system adequately protects a country’s older people. What payment types are included in Australia’s age pension? Age pension rates in Australia are based on an income test, assets test and your relationship status. For example, the normal maximum fortnightly rates for an eligible single person are: Maximum basic rate $860.60 Maximum Pension Supplement $69.60 Energy Supplement $14.10 Total $944.30 The Pension Supplement is an extra payment to help eligible retirees pay their utilities, phone, internet and medical expenses. Similarly, the energy supplement is an additional payment which assists pensioners with their household energy costs. What are the means tests for Australia’s age pension? There are two tests to determine age pension eligibility in Australia — the income test and the asset test. The income test assesses all sources of you and your partner’s (if applicable) income, including financial assets. The asset test assesses the value of you and your partner’s assets (excluding your principal home). How does Australia’s age pension stack up against other countries? Australia is typically ranked amongst the best in the world for age pensions, trailing just behind the Netherlands and Denmark. In the Netherlands, for example, the maximum age pension is 50 per cent of the minimum wage for couples, and 70 per cent of the minimum wage for single people. Denmark differs slightly, though their system is still adequate, providing pensioners with a minimum of 40 per cent of a person’s average earnings along with support through the country’s universal healthcare and housing benefits. Despite the Netherlands and Denmark consistently holding the top spots for their respective age pension systems, Australia’s age pension comes quite close. Australia is fortunate to have a stable, well-funded age pension system, with the maximum age pension equating to around 60 per cent of the national minimum wage. Is Australia’s age pension adequate for your desired retirement lifestyle? When planning for your retirement, it is important to consider your desired retirement lifestyle and what this will cost. Your ongoing costs in retirement will be impacted not only by your day-to-day living expenses but also by the value of your assets and any outstanding debt, such as a mortgage. Seeking tailored advice from a financial professional as you plan your retirement will ensure you have adequate income to fund your desired lifestyle. Contact us today to get started.   The information provided in this article is general in nature only and does not constitute personal financial advice.

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