In keeping with the prevailing orthodoxy over many years now the pre-election Federal Budget handed down on 29 March was again short on groundbreaking announcements and new strategic initiatives. The annual event has become less about outlining the Government’s master plan for Australia’s future development and more about budget costings and revenue projections, modelled on a raft of economic assumptions that range from the soundly based through to what might be described as optimistic.

That the assumptions will prove to be incorrect is by now well understood. The more pertinent question is, how sensitive are the final outcomes to the sorts of unanticipated events and global shocks that have confounded pundits and investors over recent years. In this regard, APW Partners prudent and diversified approach to portfolio construction and investment management provides some measure of protection against the inevitable uncertainty of future outcomes.

With these factors in mind, the following is a selection of the more wide-reaching Budget measures (noting that these proposals have yet to be legislated).

• Temporary reduction in Fuel Excise – to be cut by 50% to 22.2 cents / litre for six months, which should offset some of the Putin pump price uplift seen in recent weeks

• Lamington enlarged – the “Low / Medium Income Tax Offset” (LMITO) savings for eligible taxpayers is proposed to increase by $420 following lodgment of the 2021/22 tax return.

• Retirement Pension relief – the temporary measures that were first introduced at the onset of the pandemic in 2020 are proposed to be extended for the 2022/23 financial year, providing retirees with greater flexibility to choose whether to reduce their statutory minimum pensions by up to 50% in the coming year

In addition to the above proposals, some of the more pertinent changes announced in the Budget last year that have since been legislated and take effect from 1 July 2022 are as follows.

• Removal of Work Test – individuals up to the age of 75 will be able to make non-concessional or salary sacrifice superannuation contributions without needing to meet the statutory ‘work test’. This initiative potentially increases the opportunity for many older Australians to benefit from the tax effective superannuation environment and removes an unnecessarily discriminatory aspect of the previous law.

• Downsizer Contributions – the range of participants eligible to make superannuation contributions of up to $300,000 from the proceeds of sale of qualifying residential property has been expanded to those over the age of 60 (previously 65). The ‘downsizer’ label is somewhat of a misnomer as acquiring a smaller property is not a mandatory requirement. However key qualifying criteria include, that the property sold has been owned for at least 10 years, has been the family home for at least part of that time and the superannuation contributions are made within 90 days.

APW Partners advisory team will be addressing these and other pertinent matters with clients as appropriate in due course. In the meantime, should you wish to discuss the impact of these or any aspects on your particular circumstances please do not hesitate to contact your adviser.