If you have questions about what these measures mean for you and your retirement plans, your financial adviser can help you understand how they could affect you.

It's important to keep in mind that these are proposed measures. They haven’t been passed into law and could change as they make their way through Parliament.

Download the full report here

Tax

Stage 3 personal income tax changes on track for July 2024

The Government is leaving the legislated Stage 3 personal income tax reforms unchanged. From July 2024, the personal income tax system will move from four tax bands to three, with more Australian income earners falling within the new 30% tax band. After this date, the highest marginal tax rate of 45% will only apply for annual income above $200,000.

As a result, you could see a reduction in the tax you pay from 1 July 2024. See the chart below to see how your tax liability could change.

Increase in Medicare Levy exemption thresholds

The income limits when the Medicare Levy applies for singles and families and for seniors and pensioners will be increased for the 2022-23 financial year.

The threshold for singles will increase to $24,276 per year and $40,939 for families with no children. The additional threshold amount for each dependent child or student increases to $3,760 per year.

For individuals and couples who are eligible for the Seniors and Pensioners Tax Offset (SAPTO), the thresholds increases to $38,365 and $53,406 per year respectively.

Social Security measures

Increasing working age and student payment rates

The Government is proposing a $40 increase to a number of fortnightly social security payments from 20 September 2023, including JobSeeker payments. This is in addition to standard indexation increases in September and March each year.

The increase will apply to the following payments:

•    JobSeeker Payment (other than certain single principal carers of a dependent child exempted from mutual obligations);
•    Youth Allowance;
•    Parenting Payment (Partnered);
•    Austudy and ABSTUDY;
•    Disability Support Pension (Youth);
•    Special Benefit; and
•    Farm Household Allowance

$40 per fortnight increase in some payments including JobSeeker

To help older workers facing barriers to employment, the Government is also extending access to the higher Job Seeker payment rate for singles who have been on the payment for nine or more consecutive months. People age 55 or older will be eligible for the higher payment rate from 20 September 2023.

JobSeeker payment rates (at 20 March 2023)

Source: Services Australia

To help households with rising energy costs, the Government has proposed electricity bill relief of up to $500 per year for each eligible household. The relief will apply from 1 July 2023 until 30 June 2024 and will be administered by state and territory governments, along with energy retailers.

If you’re eligible, you don’t have to do anything to claim this benefit – your energy provider will apply a discount to your bill.

Up to $500 electricity bill relief for eligible households 

Eligible individuals in a household include those who have or receive:

•    Pensioner Concession Card
•    Health Care Card (including the Low Income Health Care Card)
•    DVA Gold Card
•    Commonwealth Seniors Health Card
•    Carer Allowance

More incentives for Medicare bulk billing

The Government has proposed to triple incentives for general practitioners (GPs) to bulk bill patients holding a Commonwealth concession card (such as the Pensioner Concession Card and the Commonwealth Seniors Health Card) and patients under 16.

These incentives would apply to:

•    All face-to-face GP consultations over six minutes
•    All telehealth GP services between six to 20 minutes (Level B consultations)
•    Longer telehealth GP consultations for patients registered with their GP through MyMedicare.

Improving the aged care system

To continue improvements in access and quality for aged care, the Government has announced:

•    Additional funding of $166.8 million for 9,500 extra Home Care Packages in 2023-24;
•    $144.6 million (including $73.1 million in 2023-24 and $71.5 million over 4 years from 2023-24) towards developing the new Support at Home Program. This new system brings together the Home Care Packages and Commonwealth Home Support programs. Originally scheduled for launch on 1 July 2024, Support at Home will now start from 1July 2025;
•    $11.3 billion to increase award wages by 15% for aged care workers including registered nurses, enrolled nurses, assistants in nursing, personal care workers, home care workers, recreational activity officers, and some head chefs and cooks; and
•    Additional funding of $827.2 million over five years from 2022-23 to continue improving the delivery of aged care services and respond to recommendations from the final report of the Royal Commission into Aged Care Quality and Safety.

Superannuation and retirement income streams

Tax concession reduction on super balances over $3 million

In a consultation paper released in March, the Government put forward a change in taxation for earnings on total super balances (TSB) of more than $3 million. The proposed change would be introduced from 1 July 2025 and tax on these earnings would be an additional 15%.

Tax would be calculated based on:

•    The change in balance over the financial year, taking into account withdrawals and contributions; and
•    Percentage of earnings attributable to the proportion of the TSB balance over $3 million.

Change in timing of Super Guarantee payments

Effective from 1 July 2026, employers will be required to make Superannuation Guarantee (SG) payments on the same day as salaries and wages. This replaces the quarterly payment schedule required under current legislation. Rules for the SG charge that applies for late SG payments will also be updated to reflect this change in payment frequency.

Changes in legislation for superannuation

From 1 July 2023, a number of changes will be rolled out across the superannuation system. While these were not included in this budget announcement, here’s a reminder of what’s happening with super in the next financial year.

Pension minimum payments revert from 1 July 2023

During the COVID pandemic, the Coalition Government introduced a 50% reduction in minimum drawdown payments from account-based income streams. This measure applied for the financial years from 2019-20 to 2022-23 inclusive.

The minimum withdrawal rate will revert back to normal from 1 July 2023.

Indexation of the general transfer balance cap to $1.9 million

From 1 July 2023, the general transfer balance cap (TBC) rises from $1.7 million to $1.9 million in line with changes in the Consumer Price Index.

This can have an impact on your plans for your super at retirement, whether you have savings in an accumulation account or defined benefit scheme. It’s also something to keep in mind when you’re looking at making extra personal contributions to your super.

Eligibility age for Age Pension rises to 67

From 1 July 2023, the Age Pension eligibility age will rise to 67 for those born on or after 1 Jan 1957.

Under Government legislation, the eligibility age was set to increase by six months at two year intervals until it reached 67 on 1 July this year.

Get in touch

Want to know more about these or other measures announced in this year’s Federal Budget?

Get in touch with your financial adviser – they’ll be happy to talk everything through with you. Or contact our friendly Challenger team.

This update is issued by Challenger Life Company Limited ABN 44 072 486 938, AFSL 234670 (Challenger) and is current as at 10 May 2023. It does not constitute financial product advice, taxation advice or advice on social security laws. The information in this update is general only and has been prepared without taking into account any person’s objectives, financial situation or needs. Before making a decision about a financial product, we strongly recommend that prospective investors obtain financial product advice, as well as taxation and applicable social security advice, from qualified professional advisers who are able to take into account the investor’s individual circumstances. 

This update is a guide only and based on Challenger’s understanding of the 2023-24 Federal Budget Report and current taxation and (where relevant) social security laws. These laws may change and the proposals mentioned in the 2023-24 Federal Budget Report may not become law. 

In preparing this update, Challenger relied on publicly available information and sources believed to be reliable, however, the information has not been independently verified by Challenger. While due care and attention has been exercised in the preparation of this information, Challenger gives no representation or warranty (express or implied) as to its accuracy, completeness or reliability. The information presented in this update is not intended to be a complete statement or summary of the matters to which reference is made in this update. 

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