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5 biggest announcements from The Budget and what they mean for your finances

5 biggest announcements from The Budget and what they mean for your finances

Treasurer Josh Frydenberg has delivered the 2022-23 pre-election Federal Budget, and some announcements are expected to significantly impact the finances of everyday Australians.

In terms of the winners of the 2022-23 budget, taxpayers and home buyers are expected to gain some affordability relief in the form of schemes and higher returns. But despite promises of an increase to the length of paid parental leave, women may still be worse off according to industry bodies and advocates looking to end the gender super gap.

Here are the biggest announcements from the budget for 2022-23, and what they mean for your finances.

Tax relief: cost-of-living tax return of $420

  • What is it? Increase to the low- and middle-income tax offset (LMITO).
  • How much do I get? $420 in additional tax returns. Max return of $1,500.

The low- and middle-income tax offset (LMITO) will be phased out. However, this financial year will be its final year of operation and the payments are expected to increase for everyone by around $420.

Under another Morrison government, low- and middle-income earners (Aussies earning under $126,00 a year) are expected to receive support for the rising cost of living in the form of an additional $420 in tax returns.

For example, an Australian earning $75,000 a year under LMITO would have paid $1,080 less in tax this financial year, but thanks to this increase, they would now pay $1,500 less.

This is expected to cost the budget $4.1 billion over the next few years.

It’s worth noting that the federal government is also moving into this third stage of changes to the tax bracket system by widening the lower income bracket to include those earning between $120,000 to $200,000.

When an elected Morrison government reaches stage three in the 2024-25 financial year, people in this bracket will get a tax cut of up to $9,000 a year.

This will allow Australians on these incomes to pay less tax. However, it has come to some criticism, as workers earning as little as $45,001 per annum will also be paying the same tax rate as those earning several times their wages.

$250 one-off pensioner payments

  • What is it? One-off payment in April for those on government payments.
  • How much do I get? $250 if eligible.

The 2022-23 budget has also revealed that six million Australians on a government payment may be eligible for a one-off payment to support the rising cost of living worth $250.

The $250 payment may be paid automatically in April (meaning you don’t need to apply) to the scheme recipients, including pensioners, carers, veterans, job seekers, eligible self-funded retirees, and concession card holders. For couples that are both receiving the Age Pension, for example, you will receive a combined $500 in April.

This follows recent announcements that Centrelink recipients are expected to see a $20.10 fortnightly increase for individuals and $30.20 increase for couples, rising to. $987.60 and $1,488.80 respectively.

This tax-exempt payment is expected to cost the budget $1.5 billion.

Relief on fuel costs

  • What is it? Cutting the fuel excise in half for six months.
  • How much do I get? Save 22c a litre, or $15 on average tank of petrol.

The growing cost of petrol prices has put increased strain on everyday Australian household budgets. This has been exacerbated by the war in Ukraine, with motorists now paying upwards of $2.20 a litre.

Treasurer Josh Frydenberg has revealed plans to cut the fuel excise by half for the next six months, which is expected to save Australians around 22 cents a litre, or $15 on the average tank of petrol.

The move is tipped to be monitored by the Australian Competition and Consumer Commission (ACCC) to prevent retailers from not passing on the cut to motorists.

It is expected to cost the budget around $3 billion.

First Home Buyer Schemes: regional homes & 2-5% deposit placements

  • What is it? Additional placements for home buyer schemes, new regional buyer scheme.
  • How much do I get? 50,000 new placements to help you purchase property.

The budget has also confirmed talk of expansions to first home buyer schemes that allow those with smaller deposits to purchase property without having to pay costly Lender’s Mortgage Insurance, as the government acts as a guarantor.

  • New Home Guarantee – Allows first home buyers to purchase property with a deposit as little as 5%. Places have been extended from 10,000 to 35,000 each year from July.
  • Family Home Guarantee – For single parents, allows buyers to purchase property with a deposit as little as 2%. Available for first home buyers and previous owners who do not currently own a home. Places will be extended by 5,000 each year from July.
  • Regional Home Guarantee – A new scheme supporting regional home buyers (including those who have already bought) to purchase or construct a new home in regional areas. Up to 10,000 placements may be available as early as October 2022.

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Keep in mind that recent RateCity research has found that those purchasing property with very small deposits may find themselves owing more to the bank than the property is worth if expected property value decreases occur.

Women and super: parental leave and the gender super gap

  • What is it? Combining parental leave schemes into one: Paid Parental Leave.
  • How much do I get? 20 weeks of parental leave to be split amongst parents.

The budget is also set to shake up Paid Parental Leave (PPL) by combining the two weeks of “Dad and Partner Pay” and 18 weeks of “Parental Leave Pay” into one PPL payment. This will see parents choosing to split the leave payments between them. The aim of this change is said to encourage more fathers to take parental leave.

However, the government has not committed to paying super to those taking PPL, which has resulted in criticism from Industry bodies and those looking to end the gender super gap.

Industry Super Australia has called the budget a “missed opportunity” to address the super gap and end the $5 billion a year unpaid super “scandal”.

Industry Super Australia Chief Executive Bernie Dean said: “This Budget was another missed opportunity to narrow the gender super gap and it’s disappointing the government did not make a modest investment in the financial future of millions of mums and pay super on parental leave.”

“Working mums are going to keep falling behind until super is paid on parental leave. The unpaid super scourge is a $5 billion problem politicians are refusing to fix. It is the workers’ money they should get it when they get their wages,” Mr Dean said.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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