The 2023 Federal Budget was announced last week, and it provided some interesting items for first home buyers, single parents and those who are feeling the pinch of the current cost of living crisis.
Here’s what you need to know.
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Parents get a boost
There was good news for parents in the Budget, with the Federal Government proposing increased support for single parents as well as cheaper childcare and changes to Paid Parental Leave and Dad and Partner Pay.
For single parents, the Parenting Payment (Single) will be available until the youngest child is 14, rather than the current age of eight. Cheaper childcare will be available for 1.2 million families from 1 July 2023, and Paid Parental Leave and Dad and Partner Pay will combine into a single 20-week payment. This will increase to 26 weeks by 2026.
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More opportunities for first home buyers
The first home buyer guarantee scheme is something that’s been increasingly popular for first home buyers over recent years – and from 1 July, that scheme is being widened to accept joint applications from friends, siblings and other family members. Non-first-home buyers who haven’t owned property in Australia in the last 10 years can also apply for the scheme.
“It gives more people the ability to get into the housing market – especially those who potentially weren’t able to before,” says Jarrod Owen, Partner and Financial Adviser at Fennell West .
“By using the scheme, it means you only need to have a small deposit, and you save on Lenders Mortgage Insurance.”
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Super changes could add up
Super is often a target in the budget, and the Government is reducing tax concessions on some super accounts for people with a total super balance of more than $3m, with an additional 15% tax on earnings on any balance that exceeds that $3m.
Another move that was announced in the budget and could really add up is a change to the payment frequency of super by employers. Currently, employers can pay super at the end of the quarter, meaning people are potentially missing out on weeks or months of growth on balances.
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Day-to-day relief in the cost of living crisis
The cost of living crisis is something that has directly affected us all, and the Government’s put a few things in place in the Budget to ease that burden. For some households and small businesses, there’ll be electricity bill relief of $500 for households and $650 for small businesses, while low-interest loans are available for energy-saving upgrades to your home.
When it comes to healthcare, there’s some relief there too, with the bulk billing incentive tripling, while some patients will also be able to get two months’ worth of some medicines to manage stable, chronic health conditions, reducing visits to doctors and pharmacies – and therefore the associated cost.
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Small business instant asset write-off
For small businesses, meanwhile, the Government announced it would enable businesses to instantly write off purchases of assets up to $20,000. It’s also hoping to improve small business cash flow by halving the increase in quarterly tax instalments for GST and income tax in 2023-24 to 6%, rather than 12%.
Final thoughts
Overall, says Jarrod, the budget held few surprises and was reflective of the current financial climate – and there was little that will impact the greater financial situation greatly.
“I think the predicted slowdown in the economy for the latter half of the year potentially means the budget won’t have a huge impact on the outlook for the interest rates – while there are some measures in there that are going to help, a lot of them aren’t going to flow through until the 23/24 financial year,” he says.
“There are, however, a few small tweaks in there that will make a difference for people in the day-to-day– particularly around childcare and the support for single parents.”
If you’d like to speak to one of our advisers about how we can help you achieve your financial goals, email [email protected].
