Saturday’s election was indeed very interesting. There will be a new Labor government with Anthony Albanese as the Prime Minister. At this stage, we do not know if it will be a Labor majority in the House of Representatives (Lower House) or, if the “teal independents” will have the balance of power.
In the Senate, it looks like the Greens will have the balance of power. Based on this, the new Government will need to negotiate any new legislation with climate change as their focus.
What we do know, is that this new Parliament will look a lot different to any previous.
With that in mind, what can we expect from the Labor Government which may affect your finances?
Read more below about what changes are being supported by Labor.
Deeming rates to be frozen for 2 years.
The Government has committed to freezing deeming rates for two years until 2024. This may benefit income tested pension and allowance recipients who would have otherwise have had a reduced entitlement under higher levels of deeming rates. The current deeming rates have been in effect since 1 May 2020 and are historically the lowest deeming rates since 1996.
Increased Commonwealth Seniors Health Card (CSHC) income Thresholds from July 2022.
The CSHC is available to self-funded retirees who are ineligible for the Age Pension, and meet the associated income test. It is proposed that the annual income test thresholds will be increased as below:
Currently: Single $57,761 Proposed: $90,000
Current: Couple $92,416 Proposed: $144,000
Illness-separated couple $115,522 Proposed $180,000
Ordinarily, the income thresholds are subject to indexation on 20th September each year.
Extending the exemption on home sale proceeds
Currently, an assets test exemption applies for up to 12 months on proceeds of sale of the main residence. The exemption applies to the portion of the sale proceeds that the recipient intends to use to purchase, construct or renovate a new primary residence. An extension may be applied for a further 12 months in certain circumstances, where there is a delay outside of the person’s control. There is no income test exemption and the full sale proceeds may be assessed under the income test (depending on what the individual does with the funds).
Help to Buy scheme
The Government has proposed to introduce the Help to Buy scheme, which is a shared equity scheme. Support will be available for up to 10,000 people each year. The scheme will provide equity support to eligible homebuyers for up to 40% of the purchase price of a new home, and up to 30% for an existing home. Homebuyers will be required to have at least a 2% deposit. Lenders Mortgage Insurance will also be avoided. To be eligible the person must:
- be an Australian citizen
- be aged at least 18
- earn less than the annual income cap, which is $90,000 for a single person and $120,000 for couples
- not own other property or land anywhere in the world
- live in the purchased home as the main residence, and
- pay all associated purchase costs, including all fees and duties, as well as all ongoing property costs.
After the initial purchase, the homeowner will be able to purchase additional interests in the property from the Government (minimum of 5%).
Expanding the Downsizer contribution opportunity
The eligibility age for downsizer contributions is already legislated to be reduced from 65 to 60 from 1 July 2022. The Government has proposed to further reduce the eligibility age to 55 from 1 July 2022. This allows contributions to super of up to $300,000 ($600,000 for a couple) irrespective of their age and super balance.