A new financial year will often bring changes to super and tax. Here’s what you need to know before July 1 rolls around.
1. A (small) tax cut for Australian workers
Every Australian taxpayer gets a bit more in their pocket from July 1, worth up to $268 a year, or about $5.15 a week. The tax rate on incomes between $18,201 and $45,000 is dropping from 16% to 15%. While it’s not life-changing, every little bit helps.
2. A simpler way to claim work expenses
From July 1, you can claim an instant $1,000 tax deduction for work-related expenses, no receipts needed. While this sounds like a win, a lot of people already claim more than that with proper records, so it may not actually boost your return. This change still needs to pass parliament before it becomes law, which should happen in the coming weeks.
3. More room to boost your super and get a tax break
The cap on concessional super contributions, the ones you can claim a tax deduction for, is rising from $30,000 to $32,500. This includes employer contributions and salary sacrifice, not just your own top-ups.
4. Non-concessional cap is climbing too
If you’re contributing after-tax money to your super, the annual cap rises from $120,000 to $130,000. The three-year bring-forward limit, which lets you use future years’ caps in one go, increases from $360,000 to $390,000.
5. Division 296 kicks in
This is the new tax targeting people with more than $3 million in super. After a rocky journey through parliament, some of the toughest elements, like taxing unrealised gains, were dropped. Still, the rules are complicated and can affect cash flow, investments, and estate planning. Your adviser will be in touch if this impacts you.
6. Payday super arrives
From July 1, employers must pay your super at the same time as your wages, if they’re not already. They can no longer pay just once a quarter. That means your money starts earning returns sooner. One thing to watch: if you salary sacrifice, check your arrangement still fits within the contribution caps now that payments land more often.
7. Bigger, permanent write-offs for small business
Businesses turning over less than $10 million will get to keep the $20,000 instant asset write-off permanently from July 1. It’s not law yet, but it’s expected to get support from both sides of politics.
8. Businesses may claim back tax already paid
Companies could soon claim back tax paid in the previous two years against current losses, instead of only being able to carry losses forward. Like the write-off above, this is part of the budget and still needs to pass.
9. More room for retirees’ tax-free pensions
The transfer balance cap, the limit on how much can go into a tax-free retirement pension, rises from $2 million to $2.1 million, thanks to inflation indexation. Good news for people retiring now, though those who maxed out their cap back in 2017-2019 at $1.6 million won’t benefit from this increase.
10. More paid leave for new parents
Parental leave pay is extending by 10 days, bringing the total to 130 days (26 weeks) for babies born or adopted after July 1. It’s paid at the minimum wage, which is also rising to $1,004.90 a week.
If you have any questions about these changes (and proposed changes), please get in touch with your adviser.