Happy New (Financial) Year!

Welcome to FY24! The new financial year brings excitement as it offers a fresh start to manage finances, set new goals, and make necessary adjustments. It's also time to strategically plan, adapt to changes in tax laws and policies, and explore new opportunities. So what are the changes that are shaping our financial landscape this year? I’ve got you covered with a list of all the major changes you need to be across this financial year. As always, it’s best to engage a suitably qualified professional to understand how these changes may personally effect you.

A Boost for your Super

One significant change that will have a positive impact on your retirement savings is the increase in the Superannuation Guarantee payment rate. Starting this financial year, your employer's contribution to your superannuation fund will rise from 10.5% to 11%. This increase will enable your superannuation to grow and compound, leading to a more substantial income upon retirement. Furthermore, this rate will continue to rise by 0.5% annually until it reaches 12% by July 1, 2025.

A welcome Increase in the Child Care Subsidy

Families can also look forward to relief in the cost of child care. Effective from July 10, 2023, families with earnings below $530,000 will have access to an increased child care subsidy. The maximum subsidy will rise from 85% to 90%, alleviating the financial burden for many households. This change will support more families to access childcare, participate in the workforce and boost national productivity. What’s been disappointing to observe is that almost every childcare across Australia has increased their fees to coincide with the new subsidy.

Electricity Prices are set to Rise

Whilst this isn’t a legislative change, it’s one that will see the electricity bills increase in many households across Australia. If that’s you, it might be time to switch your electricity provider. Households in NSW, QLD, and SA on standing retail plans will experience significant price increases ranging from 20.8% to 23.9% without controlled loads and between 19.6% to 24.9% with controlled loads. Small businesses in different locations may face price hikes ranging from 14.7% to 28.9% . In VIC, residential customers and small businesses will see an average increase of 25% (Source: Finder). These pricing changes are related to benchmark pricing on standing offer plans, also known as the Default Market Offer (DMO), Victorian Default Offer (VDO), or reference price, which sets the maximum amount energy retailers can charge customers on standing offers.

More Support to Buy your First Home

The Home Guarantee Scheme, including the First Home Owner Guarantee and Regional First Home Owner Guarantee schemes, will extend eligibility beyond married or de facto couples. Now, siblings, family members, and even friends can participate in these schemes, opening up opportunities for millions more Australians to achieve their dream of owning a home. Permanent residents and individuals who have not owned a home in the last 10 years will also be eligible.

Age Pension age is Increasing

To access the Age Pension from July 1, 2023 you’ll need to be 67 years old. This will apply to anyone born on or after 1 January 1957. This change have been long planned so should come as no surprise.

Flexible Paid Parental Leave

New parents will benefit from increased flexibility in accessing paid parental leave. Under the revised regulations, eligible couples can choose how to divide up to 20 weeks of paid leave, while single parents can access the full 20-week period. This change provides greater support and flexibility for growing families, with payments made at the minimum wage.

Minimum wage increase

Workers across various industries will be pleased to hear that the minimum wage is set to increase. Following a decision by the Fair Work Commission, the minimum wage will rise to $882.80 per week or $23.23 per hour. This 5.75% pay increase will help improve the livelihoods of workers on minimum wage and those covered by awards.

Medicare Levy Surcharge Income Threshold on the rise

If you don't have health insurance, you may be liable to pay the Medicare Levy Surcharge. The income threshold for this surcharge is increasing from $90,000 to $93,000 for singles and from $180,000 to $186,000 for families and couples. Understanding these changes will enable you to make informed decisions about your healthcare coverage.

“Lamington” gone, but Stage 3 Tax cuts are coming

While some changes bring positive news, others may impact your tax returns. The Low and Middle Income Tax Offset (LMITO), also known as the "Lamington," has been abolished. However, it's important to note that Stage 3 Tax cuts will come into effect in the following financial year, benefiting individuals earning above $45,000 per year, particularly higher-income earners.

Increase in Commonwealth Rent Assistance payment rate

Finally, there's good news for individuals receiving Commonwealth Rent Assistance. Starting from September, those receiving the maximum assistance will see a 15% increase in the fortnightly payment, rising from $157.20 to $180.80. This adjustment will provide additional support to those grappling with the rising costs of housing.