As we tick over to a new Financial Year, we welcome an array of legislative changes and new opportunities over the next twelve months. The start of a Financial Year is always a great time to re-visit your goals and investments to ensure they’re working as best they can or to see what could be improved. Here we’ll discuss some common factors and opportunities that we are helping our clients navigate and take advantage of.
Superannuation Guarantee (SG) increase
The SG contribution rate has increased from 10.5% to 11% effective 1 July 2023. This means your employer now pays more into your super fund. The annual concessional contribution cap (pre-tax) remains unchanged at $27,500. Given this, if you’re currently salary sacrificing it is important that this arrangement is reviewed to ensure you’re not breaching your cap.
Age Pension age reaches 67
From 1 July 2023, the qualifying age for the Age Pension for those born on or after 1 January 1957 will increase to 67. For example, if your birthday is 1 January 1957 you will become Age Pension age on 1 January 2024. This presents a great opportunity to get your financial affairs in order before applying for the Age Pension. There are a range of financial strategies available to help maximise your Age Pension.
Freeze to deeming rates ends
Deeming rates remain frozen at their current levels until 30 June 2024. Given the rise in Australia’s official cash rate, it would seem likely that the Government will increase deeming rates from 1 July 2024 to reflect the higher interest rate environment. Deeming rates are currently 0.25% (lower rate) and 2.25% (higher rate). With deeming rates at record lows for the next twelve months it is a sensible time to review what social security entitlements you might be eligible for.
Increase to Work Bonus ends
The temporary one-off $4,000 income credit added to the Work Bonus for social security expires on 31 December 2023. The temporary increase to the Work Bonus allows those in receipt of an Age Pension, Disability Support Pension or Carer Payment to earn an additional $4,000 of income from employment or self-employment before their income is counted towards their income test. The next six months present a good opportunity to generate additional income without it impacting your social security entitlement.
Minimum Pension Payment changes
In response to COVID-19, the government temporarily reduced superannuation minimum drawdown requirements for account-based pensions and similar products by 50%. They have not renewed this measure, so from 1 July 2023 those who have been previously drawing the minimum from their pension account will likely receive an increase in their regular pension payments. If this increase is surplus to your needs, you might consider re-investing these funds to help grow your wealth.
When it comes to your finances, legislation and the economy are forever changing. Don’t leave any opportunities on the table. Talk to a professional adviser today to get the most out of this Financial Year. You can contact our office on (03) 6231 3448 or admin@elevatewealth.com.au.
Damian Gibson, Partner & Financial Adviser, Elevate Wealth
The information in this document is factual in nature. It reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue, and may be subject to change. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Please seek personal advice prior to acting on this information.
