Australians know there are hard days to come, and hard decisions to accompany them.

Getting through this period stronger than we were before will rely on the best of our character – our resilience, our pragmatism, our cooperation and our confidence, and above all, our belief in each other.

The Hon Dr Jim Chalmers MP

Budget Speech, 25 October 2022

From a superannuation perspective it has been a relatively quiet Budget but there were some welcome announcements that will benefit SMSF members funding their retirement.

By virtue of what didn’t change, the budget offers certainty for the sector until next July at least. However, with a bleak economic outlook over the next couple of years, we should brace ourselves for less pleasing outcomes in May 2024.

Please remember the following budget announcement are not yet law.

Increased Commonwealth Seniors Health Card income threshold

The Government has confirmed its commitment to increase the income threshold for Commonwealth Seniors Health Card eligibility from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

This change, which could take effect in the next week or so, will increase the number of individuals eligible to benefit from a Commonwealth Seniors Health Card.

Freezing of deeming rates

The Government has also confirmed that it will freeze the social security deeming rates at their current levels until 30 June 2024.

This change will support older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.

Reducing the eligibility age for downsizer contributions

The eligibility age to make downsizer contributions into superannuation is set to be reduced from 60 to 55 years of age. All other eligibility criteria will remain unchanged.

This change will provide a boost to the number of individuals eligible to make a one-off, post-tax contribution to their superannuation of up to $300,000, using the sale proceeds of their family home – regardless of their superannuation balance.

Incentivising Pensioners to Downsize

The current Centrelink asset test exemption for proceeds from the sale of a family home, intended for the purchase of a new home, will be extended from 12 months to 24 months.

Additionally, for income test purposes, only the lower deeming rate (currently 0.25%) will apply to these exempted proceeds over the 24-month period.

These changes will allow pensioners more time to purchase, build or renovate a new home before their pension is affected. 

Relaxing residency requirements for SMSFs

Previously announced in the 2021/2022 Budget, the residency requirements applicable to SMSFs and small APRA funds were set to be relaxed through:

  • The extension of the central management and control test “safe harbour” from two to five years, and
  • The removal of the “active member” test – which would allow members who are temporarily absent from Australia to continue contributing to their SMSF.

Both of these proposals had been slated to commence from 1 July 2022.

The Government has confirmed that these changes, broadly aimed at allowing greater flexibility for SMSF members who are temporarily overseas, are still set to go ahead. However, the start date for both measures has been deferred.

How can we help?

If you have any questions or would like further clarification in regards to any of the above measures , please feel free to call us to arrange a time for us to discuss your particular requirements in more detail.

General disclaimer

This content is intended only to provide a summary and general overview of the subject matter covered. It is not intended to be comprehensive nor does it constitute advice. We attempt to ensure that the content is accurate and current but we do not warrant the content nor its currency. You should seek professional advice before acting or relying on any of the content.

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McEwen Investment Services

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