Australia is going to look a little different from 1st July - there are some big changes across areas of finance and insurance are coming in the new financial year.
It’s an important mid-year milestone with the introduction of many big rule changes such as new laws and regulations, fees and charges and taxes and benefit, according to Finder, who have summarised the changes as follows:
Super
- If you are affected financially by COVID-19, you are still able to apply for the first round of early access of up to $10,000 of your superannuation up until 30 June 2020.
- From 1 July 2020, you will be able to apply for early access up to a further $10,000 until 24 September 2020.
- From July 1 2020, the age limit for spouse contributions will be raised from 69 to 74.
- This means that people aged 70 or older will be able to receive contributions from their spouse, provided they meet the work test from age 67.
- Kate Browne, personal finance expert at Finder, said accessing your super early has the potential to impact your retirement.
“By withdrawing $10,000 now, you will be taking a far greater amount away from your future self. It is wise to consider all available options for financial assistance before jumping straight into your super."
Tax
- If you were one of the more than 4.8 million Australians working from home between 1 March and 30 June 2020, you may be eligible to claim your working-from-home expenses through the ATO’s new shortcut method.
- You can claim 80c for each hour you worked from home over this time period provided you are working from home to fulfil employment duties, not just carrying out minimal tasks (answering phone calls/emails) and you have incurred additional running expenses.
- “Failing to claim working from home expenses on your tax is akin to flushing money down the toilet. It is your money. Claim it,” Browne said.
Corona Virus Stimulus.
The federal government’s second $750 coronavirus stimulus will hit pockets from 13 July, four months after it was announced to support Aussies struggling to get by during the worst economic downturn in decades.
The $750 is expected to be paid to around five million social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners.
The payment is exempt from taxation, and will not count as income for the purposes of social security, farm household allowance and veteran payments, according to Treasury documents.
You will be eligible for the $750 if you receive one of the following payments as of 10 July 2020:
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- Age Pension
- Bereavement Allowance
- Carer Allowance
- Carer Payment
- Commonwealth Seniors Health Card
- Disability Support Pension
- Double Orphan Pension
- Family Tax Benefit A
- Family Tax Benefit B
- Pensioner Concession Card.
Savings Accounts
- From 1 July 2020, consumers will be able to direct major banks to share data from their credit and debit cards, deposit accounts and transaction accounts with accredited service providers.
- This will be extended in November to include mortgage and personal loan data.
- According to Browne, “This will be a game changer for customers looking to switch financial products. By empowering consumers to share their data with accredited institutions, open banking will make it easier to find new financial products and switch.”
- “Before that happens, the Finder app can automatically compare your current savings account and show you what you could be earning," Browne said.
Health Insurance
- Over 380,000 Australian 31 year-olds have until the end of the month to take out private health insurance to avoid the 1 July Lifetime Health Cover Loading deadline.
- The Loading kicks in when you turn 31 and adds 2% annually to your eventual premium if you don’t have hospital cover.
- For example, someone taking out insurance at 45 will pay 30% more when they get their cover.
- On the average single hospital cover of $1,977 per year, that’s an enormous $593 more they’ll have to pay per year - or $5,931 over the course of the 10 year loading period.
- Almost one million Aussies (882,791) are already paying the Lifetime Health Cover Loading according to Finder analysis of APRA data.
- “Lifetime Health Cover loading can add as much as 70% to your future premium – that could be thousands of dollars a year. Sadly, there’s just not enough education in this space. Many Australians don’t often know what Lifetime Health Cover loading really is until it’s too late," Browne said.
Minimum Wage
- The new minimum wage will be $753.80 a week or $19.84 an hour, up $13 from $740.80 a week ($19.49 an hour).
Energy
- The Australian Energy Regulator (AER) has approved the 2020-21 electricity distribution tariffs proposed by Ausgrid, Endeavour Energy and Essential Energy.
- This means that from 1 July 2020, the typical annual household bill in NSW compared to the previous year is:
- $13.78 higher for households for Ausgrid customers
- $21.62 higher for households for Endeavour Energy customers
- $16.61 higher for households for Essential Energy customers
- “Don’t set it and forget it. Whether it is your health insurance, your energy provider or your super.
- “Monitor your financial products and make sure you are getting the best deal for you,” Browne said.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
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