The New Laws And Changes To Your Tax Starting Today
Starting today, the Coalition's changes to tax policy will be implemented. Here's everything you need to know about what's changing.
The end of the Financial Year brings a host of changes to tax policies that you may (or may not) be across, including some big changes to super, HELP debt, small business owners and pensions.
In 2018, the government passed the Low and Middle-Income Tax Offset (LMITO), which was designed to give low and middle-income earners a small bonus from their tax return.
The LMITO provides a maximum of $530 to those earning between $48,000 and $90,000 and big earners (those earning above $126,000) get no benefit at all.
The LMITO will now be raised to a maximum of $1,080 for single earners and up to $2,160 for dual-income families.
However, Matt Grudnoff from the Australia Institute, told 10 daily that this is only Stage 1 of the Government's new -- so far, unlegislated --tax plan and while this stage has bi-partisan support, Stage 3 will provide a heavy benefit to high-income earners.
Stage 3 is expected to be heavily contested in Parliament when it resumes on July 2.
There are going to be some big changes to super
Super policies are changing drastically, with the intention of protecting people who don't pay attention to their super and don't have a great deal in their accounts.
Accounts with balances less than $6,000 will have fees capped at 3 percent to avoid super getting eaten away by fund fees.
It is also going to be illegal from this point on for funds to demand exiting fees.
However, the changes to super fee policy have the potential to leave Australians stranded without life insurance.
Some of the biggest fees super funds have are insurance for permanent disability, death and income protection. However, you can not claim on more than one of the policies, said Grudnoff. Meaning that if you are both permanently injured and can't work, you can only claim on one.
From July 1 super funds that have not been accessed for 16 months will have the insurance fees stopped, which is intended as a protective policy but also means that if people don't have another super fund, they won't be covered at all.
"The super industry has pointed out that if someone was taking a break from employment (say to raise kids) and was injured or killed then they would miss out on a payout unless they contacted their super fund to tell them to keep paying insurance fees," said Grudnoff.
READ MORE: Government Tax Cuts: What You Need To Know
The income bracket for paying back Help Debt is being lowered
"In short, students are going to have to pay more for their degrees (bigger HELP loans) and they will have to start paying it off sooner and in larger amounts," said Grudnoff.
Degrees are going to cost more, with the amount of the degree that students will have to pay increasing from 42 percent to 46 percent.
The income threshold at which students now have to start repaying the debt is $42,000 -- down from $51,957.
All income brackets will also be required to pay back a bigger part of the loan.
"It's not bad enough that we try and price young people out of the housing market, the Government is now keen to force them to make bigger repayments on their HELP loan," said Grudnoff.
there are going to changes for families raising kids
Part A of the family tax benefit will change slightly by increasing the higher income free area from $94,316 to $98,98, benefiting high-income earners.
The Child Care Subsidy income thresholds are also changing, with the combined income thresholds reducing for some brackets:
Combined incomes between $68,163 and $173,163 will now receive the decreased subsidy of 50 percent.
Combined incomes between $252,453 and $342,453 will be reduced to 20 percent.
Other income brackets will remain stable.
The annual subsidy cap is also increasing slightly to $10,373 -- but most families won't be affected by this.
Pensioners are going to benefit
The Pension Loan Scheme (PLS), a scheme that has previously been little-used, is being extended to cover all Australians who claim a pension.
Grudnoff explains that the PLS is a reverse mortgage that "allows you to tap into the equity you have in your house in order to increase the amount you get from your pension."
Pensioners could increase fortnightly pension payments by 50 percent, with the additional money coming out of the equity of their houses.
When pensioners die, the house is sold and the Government takes the amount that was withdrawn in the reverse mortgage with the remainder going to heirs.
"It's a way that people who are asset rich but income poor can better fund their retirement," said Grudnoff.
The Work Bonus will also increase to $300 per fortnight, allowing pensioners to earn more from work before people's pensions reduce.
READ MORE: Do Tax Cuts Lead To Higher Wages?
The minimum wage is increasing
The national minimum wage will be increasing by 3 percent from the first full pay period on or after July 1.
This means that the current weekly minimum wage for a 38-hour working week will increase from $719.20 to $740.78.
Private health insurance statements will move to MyGov
Private health insurers are no longer obligated to send your private health insurance statements to you.
The reports will now be available in the pre-fill report or may need to be requested from insurers.