What the new laws mean for you this tax time

Before you do your tax return, find out which changes on July 1 will impact you.

Before you do your tax return, find out which changes on July 1 will impact you.

Tax time is officially upon us but before you go searching for all your receipts and statements, you should catch up on the recent changes to Federal and local government laws that are sure to impact you.

Tax

$1,080 Offset

More than 10 million Australians will be smiling with the extension of the low- to middle-income tax offset (LMITO), enabling individuals to off-set $1,080 in tax and up to $2,160 for couples each earning less than $125,000 a year.

However, being a delayed payment this won’t mean an extra $1,080 on top of your tax refund, it is a reduced rate for the tax you currently pay. Either way, it’s still money in your pocket!

Work from home expenses

The ATO’s 80-cents-per-hour shortcut has come to an end. However, those who claim work from home expenses can still have the fixed-rate method of 52 cents available. Alternatively, with the help of your accountant you can undertake the actual cost method.

Superannuation

Increase in super rate

As of 1 July, the national superannuation guarantee (SG) rate rose from 9.5 per cent to 10 per cent, and is scheduled to increase by 0.5 per cent each year until it reaches 12 per cent on 1 July 2025.

Depending on your employment contract, there are two types of changes that will occur to your pay as a result of the increase. You will either be adding more to your super or your take-home pay will decrease by 0.5 per cent.

Changes to voluntary contributions thresholds

The thresholds for a number of existing super measures have increased. This includes increases to the amounts that can be voluntarily contributed to super through either salary sacrifice or by making an after-tax contribution.

Key super rates and thresholds for 2021-22:

    • Concessional (before-tax) contributions cap to increase from $25,000 to $27,500
    • Non-concessional (after-tax) contributions cap to increase from $100,000 to $110,000
    • General transfer balance cap to increase from $1.6 million to $1.7 million

Medicare

900 Medicare items changed

The financial new-year has seen a number of changes to the Medicare Benefits Schedule (MBS). Changes included a number of new items, amended items and deleted items to the scheme and could have major implications for Australians. These changes mean that rebates for certain items (such as orthopaedic, general and heart surgery) will be reduced resulting in patients having to pay thousands more. Further details can be found here.

Insurance

Additional 2% Loading to LHC

If turning 31 wasn’t already traumatic enough, you’ll now have to pay an extra 2% loading on Lifetime Health Cover (LHC) – on top of your premium if you have not taken out and maintained private patient hospital cover.

LHC loadings apply only to private patient hospital cover – they don’t apply to general treatment cover (also known as ancillary or extras cover). For details on how this works and who this applies to visit the ATO website.

Property schemes

First Home Loan Deposit Scheme Extended

The First Home Loan Deposit scheme will continue for the 2021 – 2022 financial year, allowing 10,000 eligible home buyers to place a 5% deposit for a home and have the government guarantee the remaining.

2% deposits for single parents

Under the 2021- 2022 Budget, the Federal Government announced a new program called the Family Home Guarantee, which provides eligible single parents with dependants the opportunity to build a new home or purchase an existing home with a deposit of 2%, subject to the individual’s ability to service a home loan. As of 1 July 2021, 10,000 Family Home Guarantees will be made available over four financial years.

ACT Specific

There are also some ACT specific tax changes.

No Stamp Duty

As of 1 July 2021, the ACT Government is offering no stamp duty on off-the-plan unit (unit-titled apartment and townhouses) purchases up to $500,000 for owner occupiers. Find out more here.

Increase in residential rates

On 1 July 2021, residential and commercial rates changed as part of the ACT Government’s tax reform program. During 2020-21, a one-off $150 rates rebate applied to help offset general rates increases in order to provide relief to households challenged by the COVID-19 pandemic. However, average residential rates will increase in the 2021-22 financial year.

NSW Specific

Opal fares increase

Opal fares will increase by 1.5% across the board

Increase in council rates

Council rates for NSW residents will increase by 2%  from July 1.

QLD Specific

Increase in council rates

Those living in Brisbane will also see a rise in council rates. Payments to councils will rise by 3.75 per cent, roughly $1.20 a week.