2022 Federal Budget recap
Josh Frydenberg’s fourth Budget as Treasurer focussed heavily on cost of living support for Australians. It was delivered in the context of recent floods, the situation in Ukraine, and an imminent Federal Election.
Budgets in recent years have featured significant announcements relating to superannuation—many changing fundamental aspects of the system. By contrast, the Government made no major superannuation announcements in its 2022 Federal Budget. This will be welcome news to many members anxious about having to tweak their retirement plans.
At the time of writing, any Budget announcements are proposals only and shouldn’t be considered final until relevant legislation passes. We’ll keep you updated as developments occur.
Breaking down the key announcements
Minimum drawdown rate
The Government will extend until June 2023 the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products. We’ll write to our members over the coming months about their pension arrangements.
Low to Middle Income Tax Offset (LMITO)
The Government will provide a $420 cost of living tax offset for low- and middle-income earners for the 2021-22 financial year. This is linked to the existing tax offsets and thresholds. Individuals already receiving LMITO tax offsets will have this increase added to their existing offset.
Cost of living payment
The Government will provide a one-off, tax-exempt payment of $250 to eligible pensioners, welfare recipients, veterans and concession card holders. It will be paid automatically to six million people at a cost of $1.5 billion. More than half those who will receive this payment are pensioners.
Effective date: April 2022
Paid Parental Leave Scheme
The Government is introducing a single Paid Parental Leave scheme which integrates the existing Paid Parental Leave scheme with the Dad and Partner Pay. The single scheme will apply equally to family units or single parents and provides 20 weeks of paid parental leave to be used how the household sees fit. In addition, the Government is broadening the income test to include household income up to $350,000 per year. Changes also mean eligible single parents will be able to access an additional two weeks of Paid Parental Leave.
Proposed start date: 1 July 2022.
Measures from the 2021-22 Federal Budget
The measures outlined in last year’s Federal Budget were recently legislated and will come into effect on 1 July 2022.
If you have questions about the Budget announcements and their impact on your personal financial situation, you can make an appointment with a financial adviser from UniSuper Advice. You can also check out the official Budget website.