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Key Changes Coming into Effect from July 1 in Australia
As Australia enters a new financial year on July 1, several significant changes will impact everyday life for many citizens. These updates include adjustments to superannuation, the national minimum wage, Centrelink payments, and utility costs. Here’s a detailed overview of what to expect.
Superannuation Contributions Increase
From July 1, the mandatory employer superannuation contribution will increase from 11.5% to 12% of an employee’s salary. This marks the final increment in a series of annual increases that began in 2021. For instance, an employee earning $100,000 will see an additional $500 added annually to their superannuation, potentially contributing more than $47,000 to their retirement fund over 30 years.
The transfer balance cap, which restricts the amount of super that can be transitioned into the retirement phase, will also rise by $100,000, from $1.9 million to $2 million. Conversely, the maximum superannuation contribution base will decrease from $65,070 to $62,500.
Increase in National Minimum Wage
The Fair Work Commission has announced a 3.5% increase in the national minimum wage, raising it from $24.10 per hour to $24.90. This change will take effect on July 1, adjusting weekly earnings from $915.90 to $948 for a 38-hour workweek, reflecting the government’s commitment to offering a sustainable wage increase.
Paid Parental Leave Enhancement
Paid Parental Leave will extend from 110 days (22 weeks) to 120 days (24 weeks) for children born after July 1 last year. For new parents, contributions to superannuation will begin on this payment, adding an extra 12% to their super fund during their leave.
Changes to Tax Deductibility
Starting July 1, the interest on overdue tax debts will no longer be deductible. This includes the General Interest Charge (GIC) and Shortfall Interest Charge (SIC), anticipated to enhance tax revenue by $500 million by the 2026-2027 fiscal year.
Centrelink Payments Increase
In response to the rising cost of living, millions of Centrelink recipients will receive a modest increase in their payments. Families benefiting from the Family Tax Benefit A and B, Multiple Birth Allowance, and Newborn Supplement will see their payments increase by 2.4%. This amounts to increments ranging from $4.48 to $48. Additionally, income and asset thresholds for those receiving Age Pension, Disability Support Pension, and Carer Payment will also be adjusted upward.
Rising Energy Costs
Electricity prices are set to rise, with some major suppliers like AGL increasing costs by up to 13.5% in NSW and varying percentages in other states. In NSW, this could lead to an annual increase of $300 for average household electricity bills. Nevertheless, the government is providing a $150 energy rebate, distributed in two instalments.
Higher Medicare Levy Surcharges
As of July 1, the income thresholds for the Medicare Levy Surcharge will rise. Singles earning over $101,000 and families earning over $202,000 without adequate private health insurance will be affected, up from previous thresholds of $97,000 and $194,000, respectively.
In summary, these changes from July 1 aim to improve the financial conditions for workers and families, while also recognising the ongoing economic challenges faced by many Australians. As adjustments in superannuation, wages, and payments come into play, it is critical for individuals to stay informed and understand how these alterations may affect their finances moving forward.
