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Government payments and superannuation are some of the areas that will be affected by changes this year. We take a look at what is happening.
It’s a new year and with it come a range of changes that could potentially affect the hip pocket of many Aussies. Some kicked in from 1 January while others are set to come into play later in the year. Let’s take a look at some of the key changes in 2022. It’s with noting some of these are pending legislation.
A number of government payments increased
More than one million Aussies on certain government allowances received more money from 1 January as payments increased by 3.5%. These include recipients of Youth Allowance, Austudy, Abstudy, Carer Allowance, Assistance for Isolated Children, Disability Support Pension and Mobile Allowance.
For example, the Youth Allowance for young people living away from home increased by $17.90 to $537.40 a fortnight. Those aged 18 or over living at home, received $367 a fortnight – $12.40 more. And the payment for singles with children rose by $23 to $679 a fortnight.
As for Austudy, it increased by $17.90 to $530.40 for singles and by $23 to $679 a fortnight for singles with children.
The rate for Carer Allowance increased by $4.60 to $136.50 a fortnight.
The income limits/thresholds for many of these payments also changed. You can get all the details of the new rates and thresholds online.
Changes to Child Care Subsidy rates
From 7 March families with more than one child aged five or under in care will get a higher subsidy for their second child and younger children. Younger children will receive a 30% higher subsidy, up to a maximum 95%. Families may be eligible if they earn less than $354,305.
Changes to the Pension Loans Scheme
From 1 January the Pension Loans Scheme – which allows senior Australians to draw a fortnightly payment backed by the equity in their home – officially became the Home Equity Access Scheme. Along with the name change, the interest rate the government charges was reduced from 4.5%pa to 3.95%pa.
From 1 July, 2022, subject to passage of legislation, users of the scheme will be allowed to access lump sum advance payments. According to the Department of Social Services website, these lump-sum advances will be capped at 50% of the annual rate of Age Pension, and any advance taken will reduce the fortnightly loan amount a person can receive over the following 12 months.
Another change, introduced into Parliament in December, will see the introduction of a “No Negative Equity Guarantee” from 1 July, 2022. This essentially will mean that no one will have to repay more than the equity they hold in the property they used to secure their loan.
Super Guarantee rate will increase
The rate of the Super Guarantee (SG) – which is the minimum amount that employers have to pay into eligible employees’ super accounts – will increase from 10% to 10.5% from 1 July, 2022. That will mean more money going into your super but for some Aussies it may mean a cut to their take-home pay. This is something worth checking with your employer.
The $450 threshold for super contributions to be scrapped
At the moment you need to earn more than $450 a month from your employer to receive super guarantee payments but that is set to change from 1 July, 2022 when Aussies will be entitled to super even if they earn less than $450 a month. This is good news for many and women, in particular, will be among the biggest beneficiaries.
Maximum downsizer contribution age to drop
From 1 July, 2022, the eligibility age for downsizer contributions will reduce from 65 to 60 years old. The scheme lets eligible Aussies make a downsizer contribution into their superannuation of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. According to the Australian Taxation Office (ATO), the downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps.
The work test for retirees will be abolished
Currently, if you’re aged between 67 and 74 and want to make voluntary contributions to super you’ll need to meet a “work test”. “To meet the work test, you must be gainfully employed for at least 40 hours during a consecutive 30-day period in the financial year in which the contributions are made,” explains the ATO.
This is set to change from 1 July, 2022. People aged between 67 to 74 will be able to make or receive personal contributions and salary sacrificed contributions without meeting the work test. They will still have to stick to the caps on contributions. If they want to claim a deduction for personal contributions, however, they will still be required to meet the work test.
First Home Super Saver Scheme withdrawal cap to increase
The First Home Super Saver Scheme lets budding home owners make voluntary contributions into their super to put towards a home deposit. Currently, the maximum you can withdraw under the scheme is $30,000 $60,000 for couples). From 1 July, 2022 the maximum will increase to $50,000 for individuals ($100,000 for couples).
Changes to credit reporting
From 1 July, 2022 there will be a change to how repayment history information is recorded in a credit report when a borrower has agreed to a “financial hardship arrangement” with their lender.
“The changes to the law will mean the repayment history information on your credit report will reflect what was agreed under the financial hardship arrangement. For example, if the lender agrees for you to temporarily make half your normal repayments, your credit report will show that the payment has been made if you meet that agreement,” Head of Government, Regulatory & Industry Affairs for ARCA, Michael Blyth explained in a blog post on the topic.
“The credit report will also put a ‘flag’ alongside your repayment history information that means that the repayment history is associated with a special arrangement – in the credit report this will be referred to as ‘financial hardship information’.”
There will be limits to the circumstances in which other lenders can be told about your financial hardship arrangement and also limits to what a lender can do with your financial hardship information when they do find out, Mr Blyth added.
The financial hardship information will be deleted from your credit report after 12 months.
Cover image source: Maps Expert/Shutterstock.com
This content was reviewed by Editor-at-Large Effie Zahos as part of our fact-checking process.
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