Happy Financial New Year! Or is it?

Happy Financial New Year! Or is it?

Higher interest rates, record high gas and electricity bills, higher petrol prices and the cost of food soaring – where’s the happiness in that?
The upside is that we are at 40-year lows for unemployment, which means if someone wants a job, they can have one, but it doesn’t mean that the income will be enough to manage the increasing cost of living.

On top of that, research house Morgan Stanley has reported: 

  • 40% of borrowers are less than one month ahead on their mortgages.
  • 30-40% of loans were originated in the past 2 years, and only 15% were written at rates more than 5%.
  • The good news is that 35% are 2 years ahead, versus 30% 2 years ago.

So what does the financial new year bring? Most of the changes are around superannuation.

From today, 1st July, employers will need to increase the Superannuation Guarantee contribution rate they pay from the existing 10% to 10.5%.

Further, the $450 monthly minimum threshold that has long been a thorn in super funds’ side will be no longer.

According to data released by the Association of Superannuation Funds of Australia, some 300,000 people will benefit from the change, 63% of which are female.

The new financial year will also see the work test abolished for voluntary employer, non-concessional and salary sacrificed superannuation contributions for individuals aged 67 to 74. Individuals will still need to meet the work test to be eligible for a tax deduction for personal contributions and have a total superannuation balance of less than $1.7 million.