7 October 2020
In the Federal Budget handed down by Josh Frydenberg on 6 October 2020, the headline features announced were tax cuts and infrastructure spending with a view to creating jobs following the COVID-19 pandemic. But what did this year’s Budget contain for older and low-income Australians? Let’s take a look at what was in the budget for Superannuation, Centrelink and Aged Care.
Due to the focus on stimulating the economy through tax cuts, infrastructure and job creation initiatives, there were no significant changes made to superannuation in this Federal Budget.
The changes that have been announced for superannuation focus on simplifying the management of superannuation accounts for members, with a view to reducing fees for the member over the longer term.
One initiative announced by the Government will mean new superannuation accounts will no longer be automatically opened when a new job is commenced, which will help people save on fees and charges by reducing the number of administration fees they pay.
The Government also announced the YourSuper comparison tool, which will provide an easy way for members of MySuper products to know if their superannuation fund is underperforming through the introduction of a performance test.
Whilst performance of a fund is one aspect to look at, the comparison tool does not consider the level of risk a member is willing to take for their funds, or the underlying asset allocations of Growth assets and Defensive assets.
In good news for workers, no changes were made to the plan to increase Superannuation Guarantee contributions from 9.5% to 12%.
In a further bid to boost spending in the lead up to Christmas, Age Pensioners and welfare recipients will receive two payments of $250. The first payment will be made in December this year and the second in March 2021.
The Government will want people to spend this money but whether they do is another thing.
There were no changes announced for Deeming Rates or the thresholds relating to the Income and Assets tests for entitlements.
In a move to facilitate people staying at home for longer, the cost of building a granny flat for an elderly relative will become cheaper from 1 July 2021 as capital gains tax will no longer have to be paid.
This could be part of the plan to increase in Home Care Package support, rather than have elderly relatives enter an Aged Care facility.
COVID-19 has highlighted shortcomings within the Aged Care sector. To help older Australians gain access to better quality aged care, the Government is increasing funding for Aged Care to a record $23.8bn this financial year.
In addition, there will be a further $1.6bn for 23,000 additional Home Care Packages. This is designed to keep people at home for longer where it is possible and/or practicable.
In a move designed to retain younger people within private health insurance, the maximum age for dependants allowed under private health insurance policies will increase from 24 to 31 years, and the age limit for dependents with a disability will be removed.
This proposal is aimed at stopping the large numbers of people who no longer have private health insurance with many of those aged 24-31, having never taken up private health insurance in the first place.
However, if parents continue to pay for the more expensive Family level of cover, and health premiums expected to increase at rates above inflation, this could become a strain on people’s finances.
For more information on any of the announcements from Federal Budget 2020/21, talk to your adviser or contact the Findex Wealth Management team.
For more Federal Budget coverage and news as it comes to hand, visit our Federal Budget Resource Centre.