Dennis

Once again equity markets pushed higher in the month of June and it appears nothing can stop equities from moving higher. The US President announced that he has bipartisan support for a US$1.2 trillion infrastructure deal that should lead to the continued recovery, and almost 50% of the US population has now been fully vaccinated. Australian employment numbers were strong, with the unemployment rate falling from 5.5% in April to 5.1% in May, however with Australia’s vaccine rollout lagging the world and COVID lockdowns occurring in various Australian states, the economy could be subject to further shocks.

US inflation rose to a 13-year high of 5% in May (measured year-on year) and despite the Federal Reserve downplaying that inflation is transitory and not structural, the Federal Reserve’s “Dot Plots” show that officials expect a US rate rise in 2023. This initially saw bond yields move higher but also saw the US Dollar strengthen which perhaps breaks the nexus that the US dollar will be permanently weak due to the large government deficit. Later in the month bond yields began to move lower as bond markets responded to an increasing probability of COVID-19 lockdowns in some regions due to further outbreaks of the new and more transmittable COVID strains.

The Australian share market was positive in June with large caps up 2.1% and the ASX hitting a new all-time high. The only sector to fall was Financials (-0.5%) whilst the Technology sector that sold off in May was the strongest sector in June gaining 14.5%. Small caps outperformed large caps, gaining 3.0%.

International equities rose by 2.4% on a currency-hedged basis and with the US dollar appreciating by 3% (seeing the AUD fall from US$0.7716 to US$0.7497), unhedged investors enjoyed a 4.7% gain for the month.  US equities continued to make all-time highs as the Technology sector outperformed.

Bond yields ended the month lower with the Australian 10-year government bond yield falling 18bps to 1.53% and the 2-year government bond was flat at 0.06%. In the US the 10-year government bond fell by 13bps to close at 1.47% while the 2-year government bond yield rose by 11bps to 0.25% on speculation of a rate rise in 2023.

Australian Listed Property rose 5.5% in the month – as a combination of increased corporate activity and lower bond yields buoyed prices.

Benchmark Returns 

Important information
RESEARCH INSIGHTS IS A PUBLICATION OF AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LIMITED ABN 26 098 725 145 (AUPFS). ANY ADVICE IN THIS ARTICLE IS GENERAL ADVICE ONLY AND DOES NOT TAKE INTO ACCOUNT THE OBJECTIVES, FINANCIAL SITUATION OR NEEDS OF ANY PARTICULAR PERSON. IT DOES NOT REPRESENT LEGAL, TAX OR PERSONAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. YOU SHOULD OBTAIN FINANCIAL ADVICE RELEVANT TO YOUR CIRCUMSTANCES BEFORE MAKING PRODUCT DECISIONS. WHERE APPROPRIATE, SEEK PROFESSIONAL ADVICE FROM A FINANCIAL ADVISER. WHERE A PARTICULAR FINANCIAL PRODUCT IS MENTIONED, YOU SHOULD CONSIDER THE PRODUCT DISCLOSURE STATEMENT BEFORE MAKING ANY DECISIONS IN RELATION TO THE PRODUCT AND WE MAKE NO GUARANTEES REGARDING FUTURE PERFORMANCE OR IN RELATION TO ANY PARTICULAR OUTCOME. WHILST EVERY CARE HAS BEEN TAKEN IN THE PREPARATION OF THIS INFORMATION, IT MAY NOT REMAIN CURRENT AFTER THE DATE OF PUBLICATION AND AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LTD (AUPFS) AND ITS RELATED BODIES CORPORATE MAKE NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS.

Superannuation

Minimum pension drawdown

The Government has announced that the temporary 50% reduction to the minimum pension drawdown amounts – the minimum mandatory amount you must withdraw from your pension account each year – will be extended until 30 June 2022.

The Government temporarily halved minimum drawdown amounts in March 2020 in response to the COVID-19 pandemic. This was introduced to allow pension members to withdraw less of their retirement savings and keep a greater amount invested.

These temporary minimum amounts were due to return to standard levels from 1 July 2021, however on 29 May 2021 the Government advised temporary minimums would be extended.

The full set of standard and temporary rates for each age group are outlined in the table below:

What does this change mean to you?

If you previously chose to receive the ‘standard’ minimum pension payment, your super fund may automatically apply the ‘temporary’ minimum pension payment based on your age and account balance on 1 July 2021. As a result, you may receive 50% less than anticipated over the new financial year.

If you need more than the ‘temporary’ minimum pension payment or are unsure of how this change could impact your pension, contact your financial adviser or the pension provider.

If you previously chose to receive a ‘nominated’ amount, and this amount falls below your new minimum for 2021-22, your payment will automatically be brought up to the minimum amount. If your nominated amount is higher than the minimum, it will stay the same, unless you decide to change it.

Superannuation guarantee increase to 10%

The superannuation guarantee (SG) is the minimum percentage of your ordinary time earnings that your employer has to pay into your superannuation fund, if you meet certain conditions.

On the 1^st of July 2021, the SG will increase from 9.5% to 10%.

If your employer uses an up-to-date payroll system that complies with Single Touch Payroll (STP) these changes should be relatively simple to comply with as new employees engaged on or after 1 July 2021 will automatically be registered under the new changes.

If you are a salaried employee, you should check your first payroll statement in the new financial year to ensure your employer has made the correct amount of SG contributions on your behalf.

What does this change mean to you?

There is a cap on concessional contributions which include SG, salary sacrifice and contributions which you claim as a tax deduction (known as ‘personal deductible contributions’).

As employer SG contributions count towards the concessional contributions cap and an increase to SG means more of your cap will be taken up by the SG, if you have an existing salary sacrifice arrangement you may wish to review the strategy with your financial adviser to ensure you avoid accidentally exceeding your contributions cap.

Contribution cap increases

Indexation will be applied to the superannuation contribution caps for the first time since 1 July 2017. The new contribution caps will apply from 1 July 2021 as follows:

• the cap for concessional contributions will increase from $25,000 to $27,500
• the cap for non-concessional contributions will increase from $100,000 to $110,000
• these changes will also have ‘flow-on’ effects on other superannuation contribution measures such as the three year bring forward rule (for non-concessional contributions) and the carry-forward unused concessional contributions rule

Increase to eligibility age for bring forward provision

The bring forward provision enables those under the age of 67 to contribute three years’ worth of non-concessional contributions in one financial year. Legislation was passed in late June to allow individuals aged 65 and 66 to utilise the bring forward rule from 1 July 2020.

This means from 1 July 2021, you can contribute up to $330,000 in a financial year. If you have utilised the bring forward rule in 2018-19 or 2019-20, then your contribution cap will not increase until the existing three year bring forward period has passed.

These are caps on the amount that can be paid into your super account in a financial year. If you contribute more than these caps, you may have to pay extra tax.

If you have available savings and would like to contribute these amounts to super, contact your financial adviser who can confirm your eligibility to make non-concessional contributions, including the bring forward provision.

General transfer balance cap increase

The transfer balance cap is the maximum total amount of superannuation that can be transferred into the retirement phase. If you have more than one super account, the combined balances are used to calculate this amount.

On the 1^st of July 2021, the general transfer balance cap will increase from $1.6 million to $1.7 million. However not everyone will benefit from the increase. From 1 July 2021, there will not be a single cap that applies to everyone. Instead, anyone who has previously commenced a retirement phase income stream (pension) will have their own personal TBC of between $1.6 and $1.7 million, depending on their circumstances.

Further detail is available on the Australian Taxation Office website.

Increase to preservation age

From 1 July 2021, preservation age increases from age 58 to 59.

Preservation age is generally the age at which individuals can first access their super. Reaching preservation age allows you to:

• Rollover your super to commence a transition to retirement income stream.
• Access your entire super balance (subject to satisfying a condition of release). A change in preservation age also affects tax applied to your super withdrawals. If you satisfy a condition of release, are aged between preservation age and age 60, you can access the low rate cap ($225,000 for the 2021-22 FY) which effectively reduces any tax on lump sums withdrawn up to the cap, to nil.
• You may satisfy a condition of release if, upon reaching preservation age, you retire i.e. you have ceased gainful employment and have no intention of becoming gainfully employed again in the future. Where a condition of release has been met, you can access your entire super balance as a lump sum or roll it over to commence a retirement income stream such as an accountbased pension.

Increase SMSF member number from four to six

In the new financial year, the maximum number of members permitted in an SMSF will increase from four to six. This change will bring additional flexibility and choice within the current superannuation and retirement saving system. It may allow more working family members to join the family SMSF and have their super balances and future contributions directed to the family SMSF. This could further enhance the capital base of the SMSF and provide the SMSF with greater flexibility to invest in more substantial projects or further diversify investments. Furthermore, larger balances within a SMSF may reduce the overall cost of running a SMSF on a percentage basis.

Tax

Low and Middle Income Tax Offset (LMITO)

The LMITO provides individuals with taxable incomes between $48,000 and $90,000 with a maximum offset of $1,080. If you earn less than $37,000, you will see a benefit of up to $255. If you earn between $90,000 and $126,000, you will see the offset phase out at a rate of 3 cents a dollar.

Originally set to lapse on 30 June 2020, the Government has extended the LMITO to 30 June 2022.

Tax deductions for super contributions

Taking advantage of opportunities to grow your super while reducing your tax can have long term benefits. You can potentially claim a tax deduction for some superannuation contributions you make directly from after-tax income such as savings in the bank to your super fund during the new financial year.

These are known as ‘personal deductible contributions’ and count towards your concessional contributions cap.

Before claiming a deduction for these contributions, you must give your super fund a notice of intent form and receive an acknowledgement from your fund. Other eligibility criteria apply also.

Your financial adviser can assist you with this process to help ensure you remain within contribution caps and avoid paying extra tax.

Expanded access to small business concessions

Your business may now be eligible for most small business tax concessions. From 1 July 2021, business that are not small businesses because their turnover is $10 million or more but less than $50 million can also access these small business concessions:

• simplified trading stock rules
• PAYG instalments concession
• a two-year amendment period
• excise concession

Increased small business income tax offset

You can claim the small business income tax offset if you either:

• are a small business sole trader
• have a share of net small business income from a partnership or trust
• the small business income tax offset applies to small businesses with turnover less than $5 million. The rate of offset is:
  • 13% in 2020–21
  • 16% from 2021–22
• the maximum offset is $1,000 and the ATO work out your offset based on amounts shown in your tax return

Lower company tax rate changes

The lower company tax rate for base rate entities reduced to 26% in 2020–21 and will be 25% from the 2021–22 income year. A base rate entity is a company that both:

• has an aggregated turnover less than the aggregated turnover threshold– which is $25 million for the 2017–18 income year and $50 million for the 2018–19 to 2021–22 income years
• 80% or less of their assessable income is base rate entity passive income (such as interest, dividends, rent, royalties and net capital gain) – this replaces the requirement to be carrying on a business
• when working out the rate to use when franking your distributions, you need to assume that your aggregated turnover, assessable income and base rate passive income will be the same as the previous year

Next steps…

If you have any questions about this update, or would like to discuss how these changes impact you, contact your financial adviser today.

Author: Yvonne Chu, Head of Technical Services, Australian Unity

Important information

This information has been produced by Australian Unity Personal Financial Services Ltd (‘AUPFS’) ABN 26 098 725 145, AFSL 234459. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this document represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness. Published: June 2021 © Copyright 2021

Research Insights – Market Commentary May 2021

Equity markets continued to push higher in May,  buoyed by the belief that there will not be a structural shift higher in inflation.  US March 2021 consumer price index (CPI) increased by 3% year on year, but the US Federal Reserve calmed investors by reiterating that monetary policy will remain loose. With this narrative bond yields fell ever so slightly. Investors are still trying to assess how much higher inflation realistically can be and importantly if it can be sustained; with COVID-19 variants appearing to become more rampant further restrictions and lockdowns could hamper the so far very strong economic recoveries across the globe.

The US Dollar continues to weaken against major global currencies, part of this is due to the reflation trade with global economic conditions having improved. Currency weakening is exacerbated by the large amount of US government fiscal stimulus, which has led to a large deficit plus a reduction in trading partners’ demand for US goods and services. Furthermore, emerging market currencies and commodities (with prices denominated in US dollars) have benefited from US dollar weakness.

The Australian equity market was positive in May with large caps up 2.6%.  Financials led the way (+5.9%) with CBA providing a boost following a strong quarterly earnings update during the month; the Consumer Discretionary sector was also strong (+4.2%) as consumers have become confident enough in the domestic economic outlook to spend in the economy again. The Technology sector sold off aggressively (-10.2%) as did Utilities (-6.6%). Iron ore reached new all-time highs at over US$200 a tonne however the market is unsure if this can be sustained and therefore iron ore miners only received a modest share price boost.

International equities rose by 1.0% on a currency-hedged basis and despite a slightly higher AUD versus the US Dollar (moving from US$0.7716 to US$0.7738) overall the AUD was slightly weaker versus a basket of currencies which therefore increased returns slightly for unhedged investors to 1.2% for the month. Europe outperformed the US due to advances in Financials stocks which form a higher proportion of European indices, and declines in US technology names.

Bond yields ended the month slightly lower with the Australian 10-year government bond yield falling 4bps to 1.71% and the 2-year government bond yield fell by 2bps to 0.06%. In the US the 10-year government bond fell by 3bps to close at 1.60% and the 2-year government bond yield fell 2bps to 0.14%.

Benchmark Returns 

Important information

RESEARCH INSIGHTS IS A PUBLICATION OF AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LIMITED ABN 26 098 725 145 (AUPFS). ANY ADVICE IN THIS ARTICLE IS GENERAL ADVICE ONLY AND DOES NOT TAKE INTO ACCOUNT THE OBJECTIVES, FINANCIAL SITUATION OR NEEDS OF ANY PARTICULAR PERSON. IT DOES NOT REPRESENT LEGAL, TAX OR PERSONAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. YOU SHOULD OBTAIN FINANCIAL ADVICE RELEVANT TO YOUR CIRCUMSTANCES BEFORE MAKING PRODUCT DECISIONS. WHERE APPROPRIATE, SEEK PROFESSIONAL ADVICE FROM A FINANCIAL ADVISER. WHERE A PARTICULAR FINANCIAL PRODUCT IS MENTIONED, YOU SHOULD CONSIDER THE PRODUCT DISCLOSURE STATEMENT BEFORE MAKING ANY DECISIONS IN RELATION TO THE PRODUCT AND WE MAKE NO GUARANTEES REGARDING FUTURE PERFORMANCE OR IN RELATION TO ANY PARTICULAR OUTCOME. WHILST EVERY CARE HAS BEEN TAKEN IN THE PREPARATION OF THIS INFORMATION, IT MAY NOT REMAIN CURRENT AFTER THE DATE OF PUBLICATION AND AUSTRALIAN UNITY PERSONAL FINANCIAL SERVICES LTD (AUPFS) AND ITS RELATED BODIES CORPORATE MAKE NO REPRESENTATION AS TO ITS ACCURACY OR COMPLETENESS.

Federal Treasurer Josh Frydenberg has handed down his third Budget, recognising the Government’s emergency support having provided a crucial lifeline to the economy in the face of COVID-19. The impact of COVID-19 will see the deficit reach $161 billion in 2020-21, improving to $106.6 billion in 2021-22, before further improving to $57 billion in 2024-25.

In the next stage of the Government’s economic plan to secure Australia’s recovery, the Budget focused on creating jobs, guaranteeing essential services and building a more resilient and secure Australia.

This will be achieved with a range of measures including personal income tax cuts, business tax incentives, more infrastructure and funding including schools, hospitals, aged care and the NDIS.

It is important to note; the Budget announcements are proposed at this stage and to be legislated. Changes can be made prior to these proposals becoming law.

Tax

Another 12 months of low and middle income tax offset (LMITO)

The Government has extended the LMITO for an additional 12 months meaning the offset will cease 30 June 2022. The LMITO provides an offset of up to $1,080 (singles) and $2160 (dual-income couples) depending on their income as shown below.

Consistent with current arrangements, the LMITO will be received on assessment after individuals lodge their tax returns for the 2021-22 income year.

Increasing the Medicare Levy low-income thresholds

Effective 1 July 2020 The Government will increase the Medicare levy low-income thresholds for singles, families, seniors and pensioners from the 2020-21 financial year. The following table compares the level of taxable income below which no Medicare levy becomes payable.

Self-education expenses

$250 threshold to be removed The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education. The first $250 of a prescribed course of education is currently not deductible, only the excess over $250 may be deductible. This measure will have effect from the first income year after the date of assent to the enabling legislation.

Modernising the individual tax residence rules

The Government will replace the individual tax residency rules with a new, modernised framework. The primary test will be a simple bright-line test – a person who is physically present in Australia for 183 days or more in any income year will be an Australian tax resident. Individuals who do not meet the primary test will be subject to secondary tests that depend on a combination of physical presence and measurable, objective criteria. The measure will have effect from the first income year after the date of Royal Assent of the enabling legislation.

Businesses

Temporary outright deduction for capital assets

The Government will extend the temporary full expensing measure by a 12-month period until 30 June 2023. Currently, businesses with aggregated annual turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.

Temporary loss carry-back

Under the temporary loss carry back provisions announced in the last year’s Budget, an eligible company (aggregated annual turnover of up to $5b) could carry back a tax loss for the 2019-20, 2020-21 or 2021-22 income years to offset tax paid in the 2018-19 or later income years.

The Government will extend the eligible tax loss years to include the 2022-23 income year. Tax refunds resulting from loss carry back will be available to companies when they lodge their 2020-21, 2021-22 and now 2022-23 tax returns. This will help increase cashflow for businesses in future years and support companies that were profitable and paying tax but find themselves in a loss position as a result of the COVID-19 pandemic.

Superannuation

Downsizer contributions minimum age reduced to 60

From 1 July 2022, the Government proposes to allow individuals aged 60 or over to make downsizer contributions. The measure will take effect from the start of the first financial year after Royal Assent of the enabling legislation, which the Government expects to have occurred prior to 1 July 2022.

Currently, individuals must be aged 65 or over and meet other eligibility requirements to make a downsizer contribution into their superannuation of up to a maximum of $300,000 (each) from the proceeds of selling their home. The contribution is not a non-concessional contribution, does not count towards contribution caps and is available irrespective of a member’s total superannuation balance.

All other downsizer eligibility criteria remain unchanged, including the requirement to have owned the property for at least 10 years.

Work test to be abolished

The Government proposes to abolish the work test from 1 July 2022.

Currently, the work test applies to members aged 67 to 74* where a person must have been gainfully employed for at least 40 hours in a consecutive 30-day period during the financial year before salary sacrifice or non-concessional contributions can be made. Individuals aged 67 to 74 years will still have to meet the work test to make personal deductible contributions. *For a member turning 75 years old, contributions must be received no later than 28 days after the end of the month that the member turns 75.

First Home Super Saver Scheme (FHSSS) enhancement

The FHSSS is being enhanced to increase the maximum amount of voluntary contributions that can be released from $30,000 to $50,000. This will apply from the start of the first financial year after Royal Assent of the enabling legislation, which the Government expects will occur by 1 July 2022.

Several technical amendments will apply retrospectively from 1 July 2018, including:

• individuals being able to withdraw/amend applications prior to receiving FHSSS amounts and allowing those who withdraw to re-apply for FHSSS releases in future
• increasing the discretion of the Commissioner of Taxation to amend and revoke FHSSS applications,
• allowing the Commissioner of Taxation to return any released FHSSS amounts to superannuation funds, provided money has not yet been released to the individual and
• clarifying that money returned to the Commissioner of Taxation to superannuation funds is treated as non-assessable, non-exempt income of the fund and does not count towards contribution caps of the individual

What is the First Home Super Saver (FHSS) scheme?

From 1 July 2017, voluntary concessional (before-tax) and non-concessional (after-tax) contributions could be made to superannuation to help save for a first home.

From 1 July 2018, these amounts along with associated earnings can be accessed to help purchase a first home (subject to eligibility criteria). Members must apply for and receive a FHSS determination from the Australian Taxation Office (ATO) prior to signing a contract for their first home or applying to release FHSS amounts from their superannuation fund.

For more information, visit www.ato.gov.au and search ‘First Home Super Saver Scheme’.

Scrapping the $450 a month threshold to pay compulsory employer SG

The Government proposes to abolish the requirement that employees must earn $450 a month before employers are required to make compulsory SG contributions. This measure was originally designed to help small businesses to alleviate the administrative burden which is no longer an issue in a world of digital payroll systems.

Individuals working multiple jobs who in the past did not meet the threshold with a single employer will benefit from the measure as it ensures access to additional superannuation savings for all working Australians.

The measure will take effect from the start of the first financial year after Royal Assent of the enabling legislation, which the Government expects to occur prior to 1 July 2022.

Legacy retirement product conversions

The Government will allow individuals to exit a specified range of legacy retirement products, together with any associated reserves for a two-year period. The measure will take effect from the first financial year after the date of Royal Assent of the enabling legislation. The measure will include market-linked, life-expectancy and lifetime products that first commenced prior to 20 September 2007, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another complying non-commutable income streams and limits apply to the allocation of any associated reserves without counting towards an individual’s concessional contribution caps. This measure will permit full access to all the product’s underlying capital, including any reserves, and allow individuals to potentially shift to more contemporary retirement products. Social security and taxation treatment will not be grandfathered for any new products commenced with commuted funds and the commuted reserves will be taxed as an assessable contribution.

Self-Managed Super Funds (SMSFs) – relaxing residency requirements

The Government will relax residency requirements for SMSFs and small APRA-regulated funds (SAFs) by extending the central management and control test safe harbour provisions from two years to five years for SMSFs and removing the active member test for both fund types. Currently under the active member test if a SMSF has active members then at least 50% of the total market value of the fund’s asset must belong to Australian residents for the fund to satisfy the residency test.

This measure will allow SMSF members to continue to contribute to their superannuation fund whilst temporarily overseas i.e. for work or study, ensuring parity with members of large APRA-regulated funds.

Flexibility added to Pension Loans Scheme (PLS)

Uptake of the PLS is to be improved from 1 July 2022 by allowing participants to access up to two lump sum advances in any 12 month period, up to a total value of 50% of the maximum annual rate of the Age Pension.

This equates to around $12,385 per year for singles and $18,670 for couples based on current Age Pension rates. The total amount of loan available each year will still be capped at 150% of the maximum rate of Age Pension. This means any advances taken will reduce the maximum fortnightly loan amount a person can take over the rest of the year.

A No Negative Equity Guarantee will also be introduced so borrowers, or their estate, will not have to repay more than the market value of the property. This proposal brings the PLS in line with other reverse mortgages offered in the market.

What is the Pension Loans Scheme (PLS)?

The PLS is the Government’s version of a reverse mortgage which offers older Australians who own real estate in Australia an income stream to supplement their retirement income.

It is a fortnightly loan of up to 150% of the maximum rate of Age Pension with an interest rate set at 4.5% currently. The loan is secured against real estate in Australia that a pensioner or their partner owns.

For more information on the PLS, visit www.servicesaustralia.gov.au and search ‘Pension Loans Scheme’.

Social security

Child Care Subsidy increase

Child Care Subsidy for families with two or more children aged five and under will increase by adding an extra 30 per cent subsidy for every second and third child. The Government also proposes to remove the $10,560 cap on the Child Care Subsidy.

These changes help families to receive up to a 95 per cent subsidy for their second and subsequent children. Benefit for families with two children in child care four days.

*Based on: average hourly centre-based day care rate of $10.40 per hour for a 10-hour session. Source: Treasurer’s joint media release, 2 May 2021

Welfare integrity arrangements strengthened

Taskforce Integrity involves Services Australia and the Australian Federal Police (AFP) working together to prevent, detect and investigate those trying to exploit the welfare system. Additional funding is to be provided, enhancing debt recovery and investigative capacity.
A range of tools available to recover debts from fraud and serious non-compliance include seizure and sale of assets plus the confiscation of bank account, wages and tax refunds.

Other

Aged care funding

In response to the Royal Commission into Aged Care Quality and Safety, a range of measures are proposed to ensure older Australians are treated with respect, care and dignity including:

• from 1 July 2021, releasing an additional 80,000 home care packages by June 2023, bringing the total number of packages to more than 275,000
• early 2022, informal carers and older Australians will have improved access to respite care and support through the Government’s Carer Gateway
• from 1 October 2022, access to better and safer care through a new funding model, the Australian National Aged Care Classification (AN-ACC) which better aligns funding with patient care needs and allows providers to focus on delivering quality and safe care
• from 1 July 2022, better access to aged care information as providers will be required to report care staffing minutes
• from 1 July 2024, increased choice and control as residential care places will be made available where they are needed and
• added focus on new governance arrangements with better system oversight plus skills and training initiatives to bolster staff capability and capacity

Extra support for home buyers

To support home buyers, the Government is:

• establishing the Family Home Guarantee with 10,000 guarantees made available over four years to single parents with dependents. It allows them to purchase a home sooner with a deposit of as little as two per cent
• expanding the New Home Guarantee for a second year, providing an additional; 10,000 places in 2021-22. First home buyers seeking to build a new home or purchase a newly built home will be able to do so with a deposit of as little as five per cent and
• extending the existing HomeBuilder program from six months to 18 months to give people who have already applied additional time to start their build

Digital Economy Strategy

A digital economy strategy aims to grow Australia’s future as a modern and leading digital economy by 2030. Key initiatives to be implemented include:

• Additional funding to support digital skills for Australians
• Enhancing Government services by overhaling myGov and My Health
• Bolstering cybersecurity in government, data centres and future telecommunications networks

Important information

The information provided is current as at 11 May 2021 and is subject to change. This article is not personal financial, taxation or legal advice and should not be relied on as such. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. You should obtain specialist financial, taxation or legal advice relevant to your circumstances before making investment decisions. Whilst every care has been taken in the preparation of this information, Australian Unity Personal Financial Services Ltd (‘AUPFS’) does not guarantee the accuracy or completeness of it. Where an article is provided by a third party any views in that article are the views of the author and not of AUPFS. AUPFS does not guarantee any particular outcome or future performance. Australian Unity Personal Financial Services Ltd ABN 26 098 725 145, AFSL No. 234459. This document produced in May 2021. ©