On Tuesday 9 May 2017, the Treasurer, Scott Morrison, released the Government’s 2017-18 Budget.
This year’s Budget won’t significantly impact retirees; however, there were plenty of changes announced that could affect you. For further information regarding these proposed changes, speak to your financial adviser who will look at your personal circumstances and assess how you will be affected.
It’s important to note that at this point in time, these proposed measures are not yet law and may be subject to change.
Additional super contributions for downsizers
From 1 July 2018, individuals aged 65 and over will be able to make an after-tax super contribution of up to $300,000 ($600,000 for couples combined) from the proceeds of the sale of their home. This measure will only apply following the sale of a principal home held for a minimum of 10 years.
This new measure will not attract any special Centrelink treatment but it will allow eligible individuals to make contributions above the super caps, without being subject to work or age test requirements.
From 9 October 2017 the Government will reinstate the Pensioner Concession Card (PCC) for former pensioners who lost their Age Pension as a result of the 1 January 2017 Age Pension changes. Those affected will receive the PCC and retain the Commonwealth Seniors Health Card, to ensure they continue to receive the Energy Supplement. Where they received the Low Income Health Care Card, that card will be deactivated.
From 26 June 2017, the Government will make a one-off Energy Assistance Payment of $75 for single recipients and $125 per couple for those eligible for qualifying payments on 20 June 2017, and who reside in Australia. The payment is not taxable and will not be counted as income. Qualifying payments include:
- Age Pension
- Disability Support Pension
- Parenting Payment Single
- Veterans’ Service Pension, Veterans’ Income Support Supplement, Veterans’ disability payments
- War Widow(er)s Pension, and permanent impairment payments under the Military Rehabilitation and Compensation Act 2004 (including dependent partners) and the Safety, Rehabilitation and Compensation Act 1988.
The Government will revise the residency requirements for claimants of the Age Pension and the Disability Support Pension (DSP) from 1 July 2018. Generally, claimants will now need to have 15 years of continuous Australian residence before being eligible to receive the Age Pension or DSP unless certain conditions or an exemption applies.
The Government will progressively consolidate seven working age payments and allowances into a new JobSeeker Payment or transition recipients to Age Pension.
The working age payments affected are:
- Newstart Allowance
- Sickness Allowance
- Widow Allowance
- Partner Allowance
- Widow B Pension
- Wife Pension
- Bereavement Allowance.
If you are receiving one of these payments, speak with your financial adviser to find out how these changes may affect you.
Liquid assets waiting period increasing
From 20 September 2018, the period that a person must wait before being paid an allowance (for example Newstart), if they have ‘liquid’ assets will increase from 13 weeks to 26 weeks.
0.5% increase in Medicare levy
From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5% of taxable income. The increase ensures the National Disability Insurance Scheme (NDIS) is fully funded.
Increase to Medicare levy low-income thresholds
The 2016-17 financial year Medicare levy low-income threshold will be increased as follows:
|Single, eligible for seniors and pensioners tax offset (SAPTO)||$34,244||$33,738|
|Couple, eligible for SAPTO||$47,670||$46,966|
|Additional threshold for each dependent child||$3,356||$3,306|
The Government will make a number of changes over the next two years impacting the operation of aged care, including extending the Commonwealth Home Support Program, Regional Assessment Services funding arrangements and palliative care services.
The programs contribute to essential home support services, such as meals, personal care, nursing, domestic assistance, home maintenance, and community transport to assist older people who would like to remain in their home for care.
To find out more about these proposed changes and how they may affect you, speak to your financial adviser.