Federal Budget – May 2024
A new Federal Budget 2024 has just been introduced by the government. Please keep in mind that many of announcements have not been legislated yet, so be careful when implementing your financial strategies.
I will go over the following recommendation proposed within the budget and try to explain what impact that might have on your situation when preparing for retirement of already retired:
- Taxation
- Social Security
- Other announcements
And today, I will go over the May 2024 Federal Budget:
1. Taxation
PERSONAL INCOME TAX
I have already spoken about personal income tax reduction in my video: “Labor tax cuts – who benefits the most” so please watch for the full explanation and comparison of few scenarios.
Here is a short reminder:
Those changes have already been legislated and will apply from 1st July 2024.
- Tax-free threshold remains unchanged
- 19% tax rate will be reduced to 16%
- 5% tax rate will be reduced to 30% with threshold increased from $120,000 to $135,000
- The highest marginal tax rate of 45% will now apply to incomes over $190,000
The table does not include Medicare, but we will discuss it in a minute.
If you would like to calculate your personal tax savings, please visit my website AboutRetirement.com.au for this article, where I have included a link to the tax cut calculator.
Those tax rates changes will not only impact your income tax, but also your investment return tax, including tax paid on investment disposal, so you need to be smart about selling any of your investments. This is the subject I might discuss in more detail in another video.
MEDICARE
The Medicare levy low-income thresholds for singles, families, seniors and pensioners will also be increased:
2. Social Security
FREEZE OF DEEMING RATES
This is probably one of the more important announcements for retirees.
When Albanese won the election in order to keep pensioners happy and on his side, he introduced freezing of deeming rate until 30 June 2024. That was during the time when cash rates and information were moving upwards, which obviously could impact some pensioners. This change was introduced in the October 2022 budget. You can check all the details here: “Federal Budget – October 2022”
With the current May 2024 budget, the government will freeze and continue the same level of deeming rates for Age Pensioners as well as other social security support payment recipients for a period of another 12 months, until 30 June 2025.
As a reminder are current deeming rates that will continue for another year:
Freezing deeming rates is obviously very beneficial for retirees, as some could otherwise see their Age Pension either reduced or lost altogether, especially if you are impacted by the Income Test more then by the Assets Test. Hopefully the cash rates will start reducing, to keep the deeming rates at similar level.
RENT ASSISTANCE
Rent assistance is planned to be increased by 10% from 20 September 2024.
IMPROVEMENTS TO AGED CARE SUPPORT
- In 2024-25 there will be additional 24,100 new home care packages released and
- The government wants to introduce new measures to attract and retain new aged care stuff.
3. Other announcements
ENERGY BILL RELIEF FUND
The government will provide $300 rebate to all Australian households and $325 to eligible small businesses on 2024-25 energy bills. Those rebates will not be paid as cash to your bank account, but rather each bill will be discounted automatically up to the annual limit mentioned.
As you can see, there are few measures that will be beneficial for you, however the budget is not revolutionary and fortunately no changes have been made to superannuation.
If you found this video beneficial, please give it a LIKE and SUBSCRIBE to this channel as I provide updates on fortnightly basis, always something new to keep up with the changes.
If you want to learn more, please visit my beautiful, new website AboutRetirement.com.au, where you can find over 200 articles and videos as well as calculators, eBooks and other useful resources.
If you would like to have a chat with me, either to review your current financial set up, or see if you are heading in the right direction with your planning or you would like for me to create your personalised, step by step plan to get ready for retirement or to financially improve your existing retirement just click on a box BOOK A MEETING that will take you to my personal calendar where you can choose the day and time for us to meet. My sincere recommendation is to do this well in advance, so you give yourself plenty of time to be well prepared financially, but also my calendar might be booked for the next couple of months, so this will also not create any major stress, but all will happen in time.
By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement
