The 2019/20 financial year is now firmly behind us. Going into the new financial year we will see changes to superannuation, tax concessions for small businesses, penalty rates, minimum wages and much more. The new set of changes will affect almost everyone including individuals, families, workers, business owners and even retirees. Some of these new changes also present opportunities.
Here’s a summary of changes commencing from 1 July 2020 that may affect your finances, wages and tax.
Increase to work test age
From 1 July 2020, you can make voluntary contributions into super without having to meet a work test, up to the age of 67 – compared to the previous age limit of 65. The work test is an age-based requirement whereby you must be gainfully employed for at least 40 hours over 30 consecutive days during a financial year prior to contributing
Increase to age limit for spouse contributions
The government has extended the age limit to allow people up to age 75 to receive spouse contributions. The contributing spouse may be entitled to an 18% tax offset of the contribution, up to a maximum of $540 where the receiving spouse’s income is less than $37,000.
Fifty percent reduction to minimum pension payments
The minimum annual payment required for account-based pensions and market-linked pensions has been reduced by 50%. Superannuation providers calculate the minimum annual payment required at 1 July each year. You can elect to withdraw the reduced 50% minimum pension or retain your previous drawdown amount.
Temporary early access to superannuation
If you are financially affected by the COVID-19 and a citizen or permanent resident of Australia or New Zealand, you may be able to access up to $10,000 of your superannuation from 1 July 2020 until 24 September 2020. Special eligibility rules apply.
Small business tax cuts
If you are a small business owner carrying on a business via a company structure you may be pleased to know that the tax rate for companies with turnover of less than $50 million decreased from 27.5% to 26%. If you are a sole trader, you will also benefit from the corporate tax cut as the unincorporated tax discount will increase from 8% to 13%. The unincorporated tax discount is a non-refundable tax offset available to individuals who are carrying on a business as a sole trader.
Extension of $150,000 instant asset write-off threshold
The $150,000 instant asset write-off threshold has been extended to 31 December 2020. Under the extension, businesses with an aggregated turnover of less than $500 million will be able to claim an immediate deduction for the business portion of an asset first used or installed ready for use from 1 July to 31 December 2020, in the 2020-21 tax return.
Second economic support payment
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession cardholders. These payments intend to support households in managing the economic impact of COVID-19. The second payment is available to people who are eligible payment recipients and concession card holders from 10 July 2020.
Increase to minimum wages
The national minimum wages will be increased by 1.7% for the first full pay period on or after 1 July 2020. This will apply to all award wages. For anyone not covered by an award or an agreement, the new national minimum wage will be $753.89 per week or $19.84 per hour.
First Home Loan Deposit Scheme
A further 10,000 guarantees will become available to first home buyers from 1 July 2020 and aim to assist first home buyers to purchase their first home with as little as a 5% deposit without needing to pay for Lenders Mortgage Insurance.
Parental Leave Pay changes
On or after 1 July 2020, Parental Leave Pay will include both a continuous paid period of up to 12 weeks (60 days) and 30 days Flexible Paid Parental Leave that can be taken any time before the child turns two.