The 2019-20 Australian Budget included some modest measures to help seniors, including energy bill rebates, tax cuts and superannuation changes, but failed to deliver many improvements sought by over 50s.
Downsizing.com.au has done all the hard work for you and analysed how the budget impacts and helps over 50s. We've also let you know where it has gone missing in action.
One-off power bill relief
Eligible pensioners will receive a one-off cash handout of up to $125 - before the end of this financial year - to help them pay power bills. This handout is clearly timed around the Federal election campaign.
In a move which will cost the government $284.4m, the Energy Assistance Payment will provide $75 for singles and $62.50 for each member of a couple. No funding is allocated for this program past 2018-19.
You need to be receiving the age pension, carer payment, disability support pension, single parenting payment or a range of military pensions to get the payment. Some 3.9 million Australians are expected to be eligible to get the payment.
The government says the payment will be exempt from income tax and will be paid automatically before the end of the current financial year, subject to the passage of legislation.
Super flexibility for working seniors
As the pension eligibility age increases from 65 to 67 by 2023, the government has made it easier for working Australians in this age group to make superannuation contributions. By doing this, it hopes to soften the impact of this age group being denied the pension.
As part of the budget, from 1 July 2020, Australians aged 65 and 66 will be able to make voluntary superannuation contributions without meeting the government’s work test.
Currently, voluntary contributions are only allowed if Australians in this age bracket work a minimum of 40 hours over a 30 day period.
According to Treasurer Josh Frydenberg (pictured above), the change “means that Australians aged 65 or 66 years who don’t meet the work test, because they may only work one day a week or volunteer, will now be able to make voluntary contributions to their superannuation.”
Additional lump sum contributions into super for seniors
The government also used the budget to announce that people aged 65 and 66 would be able to make three years' worth of non-concessional contributions (also known as after-tax contributions) - capped at $100,000 a year - into their superannuation. This provision is currently only limited to people aged under 65.
There has been media speculation that this change could expand the maximum amount of money that downsizers could invest into their superannuation as a result of downsizing from their family home, from $600,000 to $1.2 million a couple. We will be conducting further investigations to see whether this analysis is correct.
Personal income tax cuts
The government has announced some immediate income tax cuts, with the promise of further big changes by 2024-25. Given around 2.4 million Australians aged over 55 are in the paid workforce, this will be of benefit to older Australians.
The government will increase tax cuts first announced as part of last year’s budget.
The maximum tax relief for low and middle income earners will increase from $530 to $1,080. Taxpayers will be able to get this relief after they lodge their 2018-19 return.
If you’re earning between $48,000 to $90,000, you’ll get the entire $1,080 tax cut. If you’re earning less, you’ll only get a portion of it. All relief cuts out at $126,000.
In addition, from 2024-25, the government intends to reduce the 32.5 per cent marginal tax rate to 30 per cent and abolish the 37 per cent tax rate bracket. This change will mean that 94 per cent of taxpayers will be projected to face a marginal tax rate of 30 per cent or less in 2024-25.
Find out more here.
Residential and home aged care
The budget confirms the $724 million, five-year package first announced on 10 February 2019 to improve funding for residential and home aged care. This announcement was made the day before the first hearings of the Royal Commission into Aged Care Quality and Safety.
The funding includes $282.4 million for 10,000 additional home care packages over five years, across all care levels.
It also includes $35.7 million (over five years) to increase home care supplements for dementia and cognition and veterans and $7.7 million (over two years) to help regulators enhance the safety, quality and integrity of home care.
According to a statement from lobby group National Seniors, the investment is welcome but would do little to address the current home care waiting list of 128,000 people.
National Seniors Chief Advocate Ian Henschke said: “Only a little over a week ago, the Royal Commission heard evidence from senior officials in the Department of Health and Ageing that the home care waiting list could be eliminated through investment of an additional $2-$2.5 billion."
“Despite this compelling evidence, the Budget handed down tonight only included $282 million, or 10,000 of the additional packages that were urgently required. This was on top of the 10,000 places announced in December 2018.”
Medicare levy threshold increased for seniors
The government will slightly increase the income threshold, before the Medicare Levy is paid, to help lower income earners and reflect inflation movements.
For single seniors and pensioners, the threshold will be increased from $34,758 to $35,418. The family threshold for seniors and pensioners will be increased from $48,385 to $49,304.
The new thresholds will apply in the 2018-19 income year and cost the government $250 million over four years.
What’s not in the budget?
There were many other items on the wish-lists of lobby groups representing seniors and the property industry, which were not included in the budget. These denied desires include:
Allowing downsizers to release equity from their home, without impacting on their eligibility for the age pension
An independent tribunal to set the pension rate based on need, rather than Ministerial discretion
Increased assistance for senior renters
An oral and dental health program for older people
A review of Australia’s retirement income system
These groups will no doubt be closely watching, and lobbying, both the ALP and Coalition parties to implement these changes during the upcoming election campaign.
By Mark Skelsey, News Editor of Downsizing.com.au. Contact Mark at [email protected]