What’s in the Federal Budget for Pensioners?

Whats In The Federal Budget For Pensioners

In the 2022 Federal Budget announcement, there were some big wins for Pensioners:

Tax credits for those still working

Alongside pension payments increasing, age and service pensioners who look to get back into the workforce will receive a one-off $4,000 credit, allowing older Australians to work and keep more of their money.

The temporary income bank credit will increase the amount pensioners can earn this financial year from $7,800 to $11,800 before their pension is reduced.

Health card income threshold increased

The government will provide $69.6 million over four years from 2022 to increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles, and from $98,054 to $144,000 (combined) for couples.

Deeming rate freeze

The government has detailed it will freeze social security deeming rates at their current levels for a further two years until 30 June 2024.

This freeze is targeted at supporting older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.

Incentivising downsizing

The government will provide $73.2 million over four years from 2022 to prompt pensioners to downsize their homes.

The asset test exemption for pensioners from principal home sale proceeds will be extended from 12 to 24 months.

Further, only the lower deeming rate (0.25%) will be applied to principal home sale proceeds when calculating deemed income for 24 months following the sale of the principal property.

The government notes this measure will reduce the financial burden on pensioners looking to downsize their homes free up housing stock for younger families. This can particularly apply on the Sunshine Coast with very high home values that have increased substantially, this can be a great opportunity to get more cash into your superannuation and avoid the restrictive caps.

If you believe that any of these changes might impact your current situation, please reach out to us for a chat.

By Mike Beal, the Financial Planner on the Sunshine Coast with the Most Five Star Reviews on Google! (as at 17th November 2022).