As we enter the new financial year, several new tax changes will be coming into effect as of 1 July 2022.
Low and Middle Income Tax Offset (LMITO)
The Low and Middle Income Tax Offset will stop in the 2022-23 financial year. The LMITO tax subsidy was introduced under the Coalition Government in 2018. It was introduced as stage one in the three-part plan to reform the tax system and was designed to give low and middle income earners immediate tax relief.
LMITO increased for the 2021-22 income year, with the offset limit jumping by $420 to a maximum of $1,500 for taxable incomes below $126,000.
Superannuation
As of 1 July, the $450 a month super guarantee threshold will be removed. This means employees will be eligible for super contributions from their employer no matter how much they earn. Removing the threshold means there is less chance small super balances will be eroded by high fees and insurance premiums.
The super guarantee rate is also set to increase, from 10% to 10.5%.
First Home Super Saver Scheme
Starting 1 July , the amount as part of the First Home Super Saver Scheme that can be saved will increase from $30,000 to $50,000. This is due to the rising price of houses.
Downsizing
People looking to sell the family home and use the sale proceeds to boost their super will be able to leverage the post-tax contribution of up to $300,000 per person at the age of 60 rather than 65, at the start of July.
The work test will also be removed for those under 75 years of age who make or receive personal contributions and salary-sacrificed contributions, which will make it easier for older people to top up their super when nearing retirement.