Yahoo Finance Tax 2022: All the law changes coming July 1
The end of the financial year is just around the corner, which means several new laws are about to come into effect.
On July 1, a suite of policy changes affecting your taxes are due to kick in, including a bunch of changes to superannuation.
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Here’s everything new coming in at the end of the financial year.
So long, lamington
The Low and Middle Income Tax Offset (LMITO), colloquially known as the ‘lamington’, 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.
It was 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 changes
Come July 1, the $450-a-month super guarantee threshold will be scrapped.
That means employees will be eligible for super contributions from their employer no matter how much they earn, which was an initiative that stemmed from a 2021-22 Federal Budget commitment to improve the economic prospects of women.
There was traditionally a minimum threshold of $450 a month, but now, since the superannuation reforms, there’s less chance small super balances will be eroded by high fees and insurance premiums.
This allowed the previous government to scrap the threshold entirely.
The super guarantee rate is also set to increase, from 10 per cent to 10.5 per cent, which means your employer will be putting a higher proportion of your pay into your super.
There will also be changes to the First Home Super Saver Scheme, which allows first home buyers to use their super accounts as a savings vehicle.
Starting July 1, the amount that can be saved this way will increase from $30,000 to $50,000, to reflect rising house prices.
There are also changes to downsizer contributions coming in.
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 next month.
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.
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