Federal Budget Insights 2021/22

Household budgets can be tight for working parents, and the Federal Budget is helping out with a $1.7 billion boost⁷ to the Child Care Support subsidy to lower the cost of childcare for families with two or more children. 

increasing the Child Care Subsidy (CCS) rate by 30 percentage points for the second child and subsequent children aged five years and under in care, up to a maximum CCS rate of 95 per cent for these children, commencing on 11 July 2022.

The policy will provide rebates for the second child and subsequent children of up to 95% of the cost of care for families with two children, which Treasurer Josh Frydenberg says will leave 250,000 families better off by an average of $2,200 each year.⁸

This is great news for working families, freeing up extra cash to manage a home loan, or allowing parents to return to work to bring more money into the household. The policy won’t take effect until 1 July 2022.

The downsizer super contribution lets Australians nearing retirement make an after-tax super contribution of up to $300,000 per person when they sell their family home and move to a ‘downsizer’ home. 

Around 22,000 people have made downsizer contributions so far⁹, but this figure could rise dramatically with the Federal Budget lowering the eligibility age for downsizer contributions from 65 to 60, effective from 1 July 2022. 

This initiative doesn’t just support the retirement incomes of older Australians. It’s also likely to bring more properties onto the market, freeing up more homes for young families and upgraders.

The Low and Middle Income Tax Offset has been extended for another year, bringing tax savings worth up to $1,080 for individuals and $2,160 for couples. The maximum benefits will go to those earning between $48,000 and $90,000 annually.

The HomeBuilder grant program, which offered a $25,000 grant (later reduced to $15,000) to build a new home or significantly renovate an established home, has proven enormously popular. So much so that some applicants are experiencing delays in construction work. 

While the HomeBuilder grant is no longer available for new applicants, the Federal Budget has delivered a 12-month extension of the HomeBuilder construction commencement period for existing applicants.

The Federal Budget offers a few pluses for small businesses, with last year's business write-off perks being extended by another 12 months.

It allows businesses with a turnover of up to $5 billion to write-off the full value of any eligible asset like a work vehicle or equipment purchased between the last Federal Budget and 30 June 2023. Additionally,  assets must be acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.¹⁰

Talk to your local Mortgage Choice broker about the commercial finance options that could be available to help you invest in new equipment to help your business grow, with potential savings on tax.