The 2021 Federal Budget, as announced by Treasurer Josh Frydenberg, is notable for its big spending. Included in the detail are a number of measures in the areas of taxation, superannuation and social security.

The Low and Middle Income Tax Offset will remain. This means low and middle income earners are being offered a tax cut of up to $1,080 per annum. The maximum rebate is available to those earning between $45,000 and $90,000, and cutting out at $126,000.

For lower income workers, the requirement to earn $450 per month before an employer makes super guarantee contributions has been removed.  This is designed to help lower paid, and casual workers to build their superannuation savings.

As expected, the Government has elected not to make any changes to the rate of the Super Guarantee.  As a result, the contribution rate will go to 10% on 1 July, as already legislated.

Older Australians also gain some superannuation benefits.  Firstly, for those over the age of 67, there will be a removal of the requirement to meet a work test before making non-concessional contributions.  Starting in July 2022, this will essentially allow all Australians under the age of 75 to contribute to super, regardless of their work status. The work test will however continue to apply to concessional (that is tax deductible) contributions.

The ability to make a 3 year bring forward of non-concessional contributions will also be expanded to include anyone under the age of 75.

Home downsizer provisions are being extended.  This scheme allows older Australians who sell their home to contribute up to $300,000 for individuals and $600,000 for couples to super.  This has previously been available to people over 65, but will now be offered to retirees over 60.

Also announced was a two year amnesty given to retirees who are locked into old style retirement products commenced before 20 September 2007.  This will allow them to switch into more modern and flexible products.

Self managed super funds will gain some additional flexibility, when it comes to residency.  Currently it is possible for the trustees of a fund to be temporarily overseas for 2 years, but this is set to be extended to 5 years. This, along with removal of the active member test, will allow trustees more flexibility to work and live temporarily overseas without the need to close their self managed funds.

Aged care has received a significant boost, with an additional amount of almost $18 billion being spent.  Included in this will be an extra 80,000 home care packages.

First home buyers haven’t missed out in the 2021 Federal Budget. The First Home Super Saver scheme has been expanded with the maximum that can be withdrawn from super to cover a home deposit increasing from $30,000 to $50,000. In addition there will be assistance for families and single parents to enter the housing market, with minimal deposits.

There’s certainly a lot in this big spending budget. Many Australians can gain something from the initiatives that have been announced. To better understand how you might benefit, please speak to your adviser.