The standout announcements were a re-work of the capital gains tax (CGT) regime (including the replacement of the 50% CGT discount), significant changes to negative gearing, and the introduction of a minimum tax for discretionary trusts. While many measures won’t start until 1 July 2027 or later (and will require legislation), the direction of policy is now clear.

Overview

We have prepared a summary of the key measures for Individuals, Superannuation, Social Security and for Companies below (noting these announcements are proposals and are not yet law).

• Capital gains tax reform – from 1 July 2027, the 50% CGT discount is proposed to be replaced with cost base indexation, alongside a 30% minimum tax on net capital gains (with transitional rules).
• Negative gearing reform – negative gearing for residential property proposed to be limited to new builds (changes announced from 7:30pm AEST 12 May 2026; key rules apply from 1 July 2027).
• Discretionary trusts – proposed 30% minimum tax from 1 July 2028.
• Individual tax simplification – proposed $1,000 instant tax deduction from 2026–27 and a $250 Working Australians Tax Offset from 2027–28.
• Small business support – $20,000 instant asset write-off made permanent from 1 July 2026, plus loss carry-back reforms.
• Health & aged care – removal of the age-based uplift in the private health insurance rebate from 1 April 2027, with significant aged care funding reforms.

Individuals, families and taxation

Reforming capital gains tax (proposed) – from 1 July 2027

• For assets held more than 12 months, the 50% CGT discount is proposed to be replaced by cost base indexation (CPI).
• A 30% minimum tax is proposed to apply to net capital gains.
• The changes are proposed to apply broadly to CGT assets held by individuals, trusts and partnerships (including pre-1985 assets), with transitional arrangements to ensure gains up to 1 July 2027 are treated under current rules.
• Taxpayers will need to establish an asset’s value at 1 July 2027 (via valuation/quoted price or an ATO apportionment method) to apply the transitional rules.
• New build residential property investors are proposed to be able to choose either the 50% CGT discount or indexation/minimum tax settings (to support housing supply).
• Income support payment recipients (including Age Pension recipients) are proposed to be exempt from the minimum tax.

Negative gearing changes (proposed) – announced from 7:30pm (AEST) 12 May 2026; key rules from 1 July 2027

• Negative gearing is proposed to be limited to new build residential property.
• From 1 July 2027, losses from established residential property acquired from 7:30pm (AEST) 12 May 2026 would be deductible only against rental income or capital gains from residential property; excess losses would be carried forward.
• Properties acquired before the announcement time (including contracts entered into but not settled) are proposed to be grandfathered until disposal.
• Exemptions are proposed for widely held trusts and superannuation funds, plus certain targeted housing-related programs.

Discretionary trusts – proposed 30% minimum tax from 1 July 2028

• Trustees are proposed to pay a minimum 30% tax on the taxable income of discretionary trusts.
• Beneficiaries (other than corporate beneficiaries) would receive non-refundable credits for the tax paid by the trustee, which can be used to offset their own tax liabilities (beneficiaries still declare the income).
• Expanded rollover relief is proposed for three years from 1 July 2027 to support restructuring out of discretionary trusts (for example, into companies or fixed trusts).
• Exclusions are proposed for various trust types (including fixed and widely held trusts, complying super funds, special disability trusts, deceased estates and charitable trusts) and certain categories of income.

$1,000 instant tax deduction (proposed) – from 2026–27

• Australian tax residents who earn income from work would be able to claim an instant deduction of up to $1,000 without itemising work-related expenses (if claiming $1,000 or less).
• If work-related expenses exceed $1,000, individuals can continue to claim deductions under the existing rules.
• Other deductions (for example charitable donations, union fees and professional membership fees) can still be claimed separately.

Working Australians Tax Offset (WATO) (proposed) – from 2027–28

• A new $250 annual tax offset is proposed for income derived from work (wages/salary and sole trader business income).
• The offset is proposed to be non-refundable (it can reduce income tax payable to nil but won’t generate a refund).
• By design, WATO increases the effective tax-free threshold for income derived from work.

Medicare levy low-income thresholds – increased from 1 July 2025

• Singles: increase from $27,222 to $28,011.
• Families: increase from $45,907 to $47,238.
• Single seniors and pensioners: increase from $43,020 to $44,268.
• Family seniors and pensioners: increase from $59,886 to $61,623.
• Family thresholds increase by $4,338 for each dependent child or student (up from $4,216).

Superannuation

There were no major new superannuation tax changes announced in this Budget. However, you will need to consider flow-on impacts of the broader tax changes (particularly CGT and property settings) on investment structures and strategy over time.

• Superannuation funds are proposed to be excluded from the CGT changes (they would continue under existing CGT discount settings for super).
• Superannuation funds (including SMSFs) are also proposed to be excluded from the new negative gearing limits for established residential property.
• As previously legislated, Payday Super is due to commence from 1 July 2026 (requiring Super Guarantee contributions to be paid with salary/wages rather than quarterly).
• Also previously legislated, Division 296 is due to commence from 1 July 2026 (additional tax on super earnings for individuals with Total Super Balance over $3 million, with an additional tier above $10 million).

Social security and health

Services Australia – additional resourcing

• $2.2 billion over five years from 2025–26 to improve service delivery, including additional frontline staff, improved centre safety/security, cyber security uplift and enhancements to the myGov platform.

Pension Supplement – overseas recipients (from 1 July 2025)

• The full rate of Pension Supplement would continue for temporary absences from Australia for up to 12 weeks (extended from 6 weeks).
• The Pension Supplement would cease for those residing permanently overseas, or for temporary absences beyond 12 weeks.

Private Health Insurance Rebate – removal of age-based uplift (from 1 April 2027)

• The Government proposes removing the age-based uplift so older policyholders would no longer receive a higher rebate percentage than younger policyholders at the same income level.
• Savings are intended to be reinvested into aged care measures.

Pharmaceutical Benefits Scheme (PBS)

• $5.9 billion over five years from 2025–26 for new and amended listings on the PBS and Repatriation PBS.

Aged care

Residential aged care

• $606.5 million over four years from 2026–27 (plus additional longer-term provision) to respond to the Residential Aged Care Accommodation Pricing Review.
• Capital subsidies for new and expanded homes, including payments per supported resident per day for newly constructed and significantly expanded homes (with multi-year payment periods).
• Funding for dementia care supports, including expansion of the Hospital to Aged Care Dementia Support program and additional Specialist Dementia Care Program units.
• Measures to allow greater flexibility in how room prices are set.

Support at Home program

• $1.4 billion over four years from 2026–27 (and ongoing funding) to improve affordability and access to home care supports.
• Personal care services (including showering) proposed to be fully funded by the Government for all Support at Home recipients.
• Program refinements to assessments, hardship applications and end-of-life pathways, and bringing forward the release of Support at Home places in 2026–27.

Companies and small business

$20,000 instant asset write-off – from 1 July 2026

• The $20,000 instant asset write-off is proposed to be permanently extended for small businesses with turnover up to $10 million.
• Assets valued at $20,000 or more can continue to be placed into the simplified depreciation pool.

Loss reforms for businesses and start-ups

• For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion are proposed to be able to carry back a tax loss and offset it against tax paid up to two years earlier (subject to franking account limits).
• From 1 July 2028, eligible start-ups with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years are proposed to be able to utilise the loss to generate a refundable tax offset (limited to FBT and withholding on Australian employee wages).

Other measures (regulation and systems)

• Managed investment schemes: $17.8 million over four years from 2026–27 to strengthen governance requirements, supervision and enforcement, including enhanced ASIC data capability.
• Tax and super fraud mitigation: $86.3 million over four years from 1 July 2026 (plus ongoing funding) to modernise fraud prevention/detection in the tax and super systems, including enhanced real-time controls.
• Digital ID: $654.3 million over four years from 2026–27 to maintain security and reliability of the Australian Government Digital ID System (including myID and related systems).
• Boosting productivity – better regulation: $198.1 million over two years from 2026–27 to uplift business registers and extend the Consumer Data Right, including exploring enabling taxpayers to share certain ATO-held data through the Consumer Data Right.
• AUSTRAC: additional funding to continue implementing anti-money laundering and counter-terrorism financing reforms.
• Scams framework: introduction of a user charge to recover the cost of operating the SMS Sender ID Register from 2026–27.

What this may mean for you

• If you own (or are considering buying) investment property, the proposed negative gearing changes and CGT reforms may materially change after-tax outcomes—particularly for established residential property acquired after Budget night.
• If you hold investments personally or via trusts, the proposed shift from the CGT discount to indexation/minimum tax settings may influence timing, record-keeping (valuations at 1 July 2027) and preferred ownership structures.
• If you operate through a discretionary trust, the proposed 30% minimum tax from 1 July 2028 may warrant a review of whether your structure remains fit for purpose.
• For employees and small business owners, the proposed $1,000 instant tax deduction and WATO may provide modest ongoing tax relief.

As always, Budget announcements are proposals and need to be legislated before becoming law. We’ll continue to monitor the passage of legislation and will update our commentary as details are confirmed.

Seek out further advice and start your journey to being free around your money and creating wealth with understanding.

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523

The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

The post Federal Budget 2026 appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

When you’re clear on values – things like security, freedom, family time, creativity, travel, community or giving back – your money stops being a random series of transactions and becomes a reflection of those priorities. This is the heart of values‑based financial planning: aligning how you earn, spend, save and give with the life you want, not just the life you’ve drifted into.

Heading into 2026, there are 5 money things worth letting go of, and 5 worth deliberately focusing on instead. Each of them is really about moving from autopilot to alignment.

5 money things to let go of in 2026

1. Comparing your money to everyone else’s
It has never been easier to compare your life (and your bank account) to other people’s – friends, colleagues, influencers, even strangers online. But comparison rarely leads to clarity; it usually leads to shame, pressure and decisions that don’t match your reality or your values.

Letting go of comparison means recognising that your money story is unique. Your age, background, family setup, health, career path, and goals all shape what’s “right” for you. Measuring yourself against someone else’s highlight reel isn’t just unhelpful – it can pull you away from decisions that would genuinely support your version of success.

2. Guilt about past money decisions
Most people carry some level of regret about past financial choices: debt that lingered, investments that didn’t work out, spending that went off the rails, or opportunities missed. Guilt can be a heavy weight, and while it might feel like you’re “holding yourself accountable,” what it often does is keep you stuck.

There’s a big difference between learning from the past and living in it. A more helpful frame for 2026 is: “I did the best I could with what I knew at the time – now I know better, I can do better.” Letting go of guilt frees up emotional and mental energy so you can focus on aligned action now.

3. “Shoulds” about how life is supposed to look
Many money decisions are driven by scripts picked up along the way:

• “You should buy a house as soon as possible.”
• “You should be at X income by 30, Y by 40.”
• “You should have this kind of car, lifestyle, or career to be successful.”

Those “shoulds” may have nothing to do with your values, personality or ideal lifestyle. For some people, home ownership is deeply aligned to their sense of security and roots; for others, flexibility, mobility and low commitment matter more. Letting go of generic “shoulds” opens the door to designing a life (and money plan) that fits you, not a template handed down by family, society or social media.

4. Mindless spending that isn’t aligned to your values

Spending on autopilot is easy: tap, click, Afterpay, subscription renewals, retail therapy after a big week. Over time, that autopilot spending can dilute your ability to fund the things you care about most – travel, time off, study, experiences with loved ones, or giving back.

Letting go of mindless spending isn’t about never having fun or cutting all “non‑essential” costs. It’s about asking: “Does this reflect my values?” and “Would I choose this again if I was being fully conscious?” When your spending starts to line up with your priorities, financial guilt can give way to a sense of integrity and calm.

5. All‑or‑nothing money thinking

All‑or‑nothing thinking sounds like:
• “If I can’t save a lot, there’s no point starting yet.”
• “If I can’t invest perfectly, I may as well wait.”
• “If I can’t clear the whole debt, I’ll just ignore it.”

This mindset keeps goals forever parked in the future. Healthy money habits tend to be built from small, consistent actions – $20 automated savings, a fortnightly investment, a monthly check‑in, a gradual debt repayment plan. Letting go of perfectionism and all‑or‑nothing thinking in 2026 means allowing yourself to start where you are, with what you have, and build from there.

5 money things to focus on in 2026

1. Clarifying your core values

Before tweaking your budget or setting a new savings goal, it’s worth asking: “What genuinely matters to me this year?” Common values include:
• Security and stability
• Freedom and flexibility
• Family and relationships
• Health and wellbeing
• Learning and growth
• Community and contribution

Once you name your top 3–5 values, you can use them as a filter for decisions: “Does this choice support or undermine my values?” A plan built this way feels more sustainable, because it’s aligned to your real motivations, not borrowed ones.

2. Spending with intention

Intentional spending isn’t about being frugal for the sake of it; it’s about making sure your money flows toward what you truly care about. That might look like:
• Redirecting some impulse spending into an annual holiday fund.
• Choosing fewer, higher‑quality purchases over constant “cheap” buys.
• Saying no to things that don’t feel aligned, even if they’re “expected.”[kingswood-group]
A simple values‑aligned spending plan can be more powerful than a complicated budget that you never stick to. The key question for 2026: “Does my cashflow reflect my priorities, or someone else’s?”

3. Building buffers, not just balances

It’s tempting to focus only on visible balances – how much is in savings, investments or super. But resilience often comes from the less glamorous side of the ledger:[pacfinancial]
• Emergency funds (for the unexpected car repair, medical bill, or gap between jobs).
• Appropriate personal insurances (income protection, life, TPD, trauma), especially when others rely on you.
• Superannuation set up in a way that matches your risk tolerance and long‑term goals.

In 2026, focusing on buffers means asking: “If life threw a curveball, how well could my current setup handle it?” Strengthening these foundations can create space to take opportunities, not just avoid problems.

4. Setting realistic, values‑aligned goals

Goal‑setting is often treated like a numbers game – hit this income, save this amount, reach this net worth. But the most meaningful goals sit at the intersection of numbers and values.

Instead of “save more,” a values‑aligned goal might be:
• “Build a $10,000 buffer by December so I can feel calmer and more secure.”
• “Pay an extra $200 per month off the mortgage to create flexibility in 5 years’ time.”
• “Put $50 per fortnight into an investment account for future travel or time off work.”

The test for 2026 is: “Does this goal move me closer to the way I want to be living?” If the answer is yes, you’re on the right track.

5. Regular check‑ins with your money story

Life changes: relationships, health, work, family, priorities. A plan that was right two years ago might not fit you now. Building in regular check‑ins – monthly, quarterly or at least annually – helps you keep your money in step with your life.

A simple check‑in might include:
• Reviewing where your money actually went.
• Asking whether your spending, saving, investing and giving still align with your values.
• Tweaking any settings (like super, investments, or insurances) that no longer reflect your risk tolerance or goals.
Treat your money plan as a living document, not a one‑off task. The more often you review and realign, the more your financial life will feel like it “fits” you.

Bringing it all together for 2026

Letting go of comparison, guilt, “shoulds,” mindless spending and all‑or‑nothing thinking creates space for something better: clarity, intention, resilience, meaningful goals and regular reflection.

When your money decisions are grounded in your values, each dollar has a job that serves the life you want – whether that’s more time with family, more freedom in your work, more travel, more contribution, or simply more calm.

A useful question to sit with as 2026 begins:
“If money is the tool, what kind of life do I want it to help me build – and what’s one step I can take this week to move in that direction?”

The post Why values need to lead your money appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

Please note that this is all yet to be legislated.

What Are the New Thresholds?

The key change introduces two balance thresholds for total superannuation savings:

• $3 Million Threshold: If your total super balance at the end of the financial year exceeds $3 million, additional tax applies on earnings above this amount. Specifically, earnings on the excess over $3 million will be taxed at an additional 15%, making the effective tax rate on these earnings 30%. The first $3 million still enjoys the usual tax concessions.

• $10 Million Threshold: For balances exceeding $10 million, a further tax rate of 40% applies—but crucially, this tax only applies to realised gains rather than unrealised gains. This change reflects a relief from earlier proposals where unrealised gains would have also been taxed, a move that had generated widespread concern.

Why These Changes Matter

These tax changes are designed to ensure superannuation tax concessions remain targeted at typical Australians saving for retirement, rather than very high-balance accounts. Only a small number of Australians—estimated to be under 100,000—hold balances above $3 million and will be affected.

Moreover, the indexing of these thresholds to inflation means fewer people will inadvertently become subject to these higher tax rates just because their balances grow due to market returns rather than additional contributions.

We are still yet to see how they will value defined benefit members but we will keep across these changes as we see further information.  They had a formula for the past regulation which will likely the used.

What Should You Do?

If your super balance approaches or exceeds these thresholds, it’s more important than ever to review your retirement savings strategy. Consider:

• How your investment earnings are generated and when gains are realised.

• The timing of withdrawals or rollovers that could trigger tax on realised gains.

• Working to optimise your super structure in light of this new tax environment.

At Money Mechanics, we specialise in creating tailored strategies that fit your unique retirement goals and financial situation. These changes mean careful planning and expert advice will be essential for those impacted, to ensure your superannuation continues working hard for your retirement.

Feel free to reach out if you’d like to discuss what these changes mean specifically for you and how to plan for a tax-efficient retirement strategy.

Seek out further advice and start your journey to being free around your money and creating wealth with understanding.

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra, Newcastle and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523

The post Understanding the New Superannuation Tax Changes for High Balances in 2025 appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

Labor’s Pre-election Budget has focused on cost of living pressures in the forms of continued energy relief, reduction in Pharmaceutical Benefits Scheme (PBS) medication co-payment and some new personal income Tax Cuts.  They have also announced proposed changes on the HECS/HELP repayments and also a reduction in outstanding debt. There has been no information on any future Superannuation changes (the $3Million Cap or Division 296 Tax is still before the Senate and is likely to lapse when the election is called) noting some thresholds are due to index as we move into the new Financial Year.

For small business, there was little new support here other than a focus on protections for those in a Franchise business relationship.  As previously announced from 1 July 2026 Pay Day Super legislation will require business to pay staff on the same day as their payday.  Draft legislation has been released (11 April 2025) and has bi-partisan support so although it is not likely to be legislated before the election is called it will likely come into effect in the new Parliament.

Although there has been an Aged Care Taskforce Report (completed in December 2023) there are a few noted changes with extra funding but the long term viability has not been considered with focus still on increasing access to home care, improving the quality and regulation of aged care services and addressing workforce issues.

As always before any of these announcements can be implemented, they will require passage through parliament and as noted we are about to enter an Election cycle.

Overview

We have prepared a summary of the key measures for Individuals, Superannuation, Social Security and for Companies below:

Individuals and Families and Taxation:

• From 1 July 2026 it has been announced the 16 percent marginal rate will reduce to 15 percent and then from 1 July 2027 the 15 percent marginal rate will reduce to 14 percent.  This would provide a tax cut of up to $268 in 2026-27 and up to $536 in 2027-28:

• Cutting Student Debt (HECS/HELP) – From 1 July 2025 The Government will reduce all outstanding Student debt by 20 percent.  In addition from 1 July 2025 the income threshold for which you start repaying your debt will increase from $54,435 to $67,000.
• Increasing the Medicare levy low-income thresholds – The Medicare levy low-income thresholds for singles, families, seniors and pensioners will increase from 1 July 2025. The increase in thresholds provides cost-of-living relief by taking account of recent CPI outcomes so that low-income individuals continue to be exempt from paying the Medicare levy.  The threshold for singles will be increased from $26,000 to $27,222. The family threshold will be increased from $43,846 to $45,907. For single seniors and pensioners, the threshold will be increased from $41,089 to $43,020. The family threshold for seniors and pensioners will be increased from $57,198 to $59,886. For each dependent child or student, the family income thresholds will increase by a further $4,216 instead of the previous amount of $4,027.
• Co Payment for Pharmaceutical Beneftis Scheme (PBS) – patient co-payments will reduce from 1 January 2026 from $31.60 down to $25.00.  There is no change to the co-payment for concession card holders who will pay no more than $7.70 plus any manufacturer premiums.
• Foreign Property Ownership – The Government announced a number of measures to restrict foreign ownership of established housing.  From 1 April 2025 for two years foreign persons (including temporary residence and foreign owned companies will be banned from purchasing established dwellings.
• Help to Buy Program – The Government will increase funding for the Help to Buy (home ownership) program and increase the income thresholds from $90,000 for singles to $100,000 and for couples from $120,000 to $160,000.  There will also be increase to the property price level.  Under the program the Government provides up to 40% contribution to buy homes.

Superannuation:

• Indexation of Super Transfer Balance Cap – Based on indexation which is in place Super Transfer Balance Cap will increase from 1 July 2025.  This is not a budget measure but part of already in place legislation.  The General Transfer Balance cap will increase from $1.9 Million to $2 Million.  This is the amount of money each person can have in pension mode within the superannuation system.  With this indexation the Defined Benefit Income Cap will increase to $125,000 per year.

• No Changes or further announcements on Targeted Super Concessions  – As announced in March 2023, the Government plans reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025.  This legislation is held up in the Senate and is likely to lapse when the Federal Election is called.

Individuals with a total superannuation balance of less than $3 million will not be affected.  It will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15 per cent, or zero per cent if held in a retirement pension account.  Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests. This will ensure commensurate treatment.  The measure will not place a limit on the amount of money an individual can hold in superannuation. The current contribution rules continue to apply.

• Securing Australians’ Superannuation Package (from last 2 Budgets)– increasing the payment frequency of the Superannuation Guarantee (SG) and investing in SG compliance From 1 July 2026, employers will be required to pay their employees’ SG entitlements on the same day that they pay salary and wages.  Currently, employers are only required to pay their employees’ SG on a quarterly basis. By increasing the payment frequency of superannuation to align with the payment of salary and wages, this measure will both ensure employees have greater visibility over whether their entitlements have been paid, and better enable the ATO to recover unpaid superannuation. Increased frequency of payment will also support better retirement outcomes. Changes to the design of the SG charge will also be necessary to align with increased payment frequency. This has bi-partisan support and will likely be legislated in the next Parliament.

Social Security and Aged Care:

• Social Security – No Announcements made including on deeming rates which have been frozen until 30 June 2025. Current deeming rates are 0.25% and 2.25%.  This may become an election announcement.
• Aged Care – No new announcements here but further funding to implement the Age Care reforms. Already announced and legislated changes will come into effect from 1 July 2025 based on new means testing and costing arrangements for new entrants into the system.
• Expanded Access to Early Child Education – funding has been announced to commit to a new 3 day guarantee where each child would be eligible for at least 3 days of subsidised care regardless of families level of work or study.

Companies and Small Business:

• Small Business Support – $20,000 instant asset write-off will cease from 1 July 2025 – No further extension of the instant asset write-off threshold of $20,000 which is due to end 30 June 2025. Small businesses with aggregated annual turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.
• Extension of Energy Bill Relief For Small Business $325 payment -This measure has been announced to extend until 31 December 2025.

Seek out further advice and start your journey to being free around your money and creating wealth with understanding.   Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523   The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

The post Federal Budget 2025 appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

For small business, there was the extension of the $20,000 instant asset write off to 30 June 2025, along with energy bill relief ($325 to eligible small businesses).   As well as notification that from 1 July 2026 Pay Day Super legislation will require business to pay staff on the same day as their payday.

Although there has been an Aged Care Taskforce Report (completed in December 2023) there are a few noted changes with extra funding but the long term viability has not been considered with focus still on increasing access to home care, improving the quality and regulation of aged care services and addressing workforce issues.

The estimated tax savings per income level are detailed below:

The post Federal Budget Update 2024 appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

Last night Treasurer Jim Charmers announced his second Federal Budget.   The Federal Budget is a plan for how things will be spent and focus on what the Federal Government see’s as priorities as well as being a great transparency in our democratic system.

Labor’s second Budget has pointed to ongoing inflationary pressures, higher interest rates than what Australians have recently been used to and some “strains” within the financial sector, he walked on a tightrope: presenting us a budget surplus (in the short term) while suggesting the outlook was far less rosy.  Australia’s economic growth is predicted to fall to 1.5 per cent next financial year and only recover to 2.25 per cent the year after. This comes despite a $125.9 billion improvement in the budget over five years and saving a huge $83 billion in interest over the next 12.

Central to the cost of living focus were power bill relief for more than five million low income families, and a $2.2 billion increase to medicines on the PBS. All Australians on JobSeeker will receive an extra $40 per fortnight, and those aged 55 and over will now have access to increased payments that will bring them inline with those above 60. Medicare will be bolstered with a $3.5 billion injection that will enable more free consultations to a further 11.6 million people.

The stage 3 tax cuts for 2024 are unchanged and the well discussed changes to Superannuation which were announced in March this year, with the Government plans to reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025.

For small business, there was the extension of the $20,000 instant asset write off, green subsidies to incentivise investment in power-saving opportunities and some initiatives to help SMEs adopt digital technologies.

The post Federal Budget Update 2023 appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

The sudden demise of Silicon Valley Bank (SVB) has caught not just its depositors, but markets by surprise. In the space of a few short hours, a classic bank run unfolded as SVB unexpectedly found itself with inadequate liquid assets to meet depositor withdrawal demands. This has placed the spotlight on the broader banking sector and raised questions about risks of contagion.

Is SVB a special case?

For a commercial bank, deposits typically make up most of its liabilities. Many of SVB’s depositors are tech start-ups, who also rely on private venture capital to supply their funding needs. The tech companies are usually held as part of a portfolio of equity exposures by the venture capitalists, who can exert strong influence over those companies’ operations.

As the US Fed hiked interest rates at breakneck speed and the era of free money was consigned to history, venture capital funding started to dry up. Hence throughout early 2023, depositors began withdrawing funds from SVB at a much higher rate. This forced the bank to liquidate assets (including “low risk” government bonds and mortgage-backed securities) that had suffered large falls in value due to the rising interest rate environment. And SVB held too many longer dated assets that were classified in a way that legally prevented it from mitigating this interest rate risk.

The losses quickly mounted and were made public when SVB announced that it needed to raise US$2.25b to shore up its balance sheet. The venture capital funds saw the writing on the wall and instructed their portfolio companies to withdraw the rest of their money. This ensured that SVB’s liquidity issues would become intractable and within hours the mismatch of liquid assets versus withdrawal requests became overwhelming.

Is the failure of SVB symptomatic of a greater issue?

As the regulators intervened, there was great uncertainty as to what might become of the uninsured component of the deposits. The Federal Deposit Insurance Corporation (FDIC) guarantees repayment of deposits up US$250k. Depositors above this amount are classed as unsecured creditors. With less than 5% of SVB’s deposits lower than this amount, it seemed that many smaller tech businesses would be unable to pay staff until their deposits were returned in full (which could have other economic ramifications).

Initially, US Treasury Secretary Janet Yellen (and former chief of the US Fed) said there would be no bailout because the collapse of SVB looked very different from the events of the GFC, so “no domino effect” would take place. However, within just hours of these comments, the New York-based Signature Bank also failed, and the FDIC was appointed as receiver. With confidence in the US banking system beginning to plummet, the FDIC and the US Fed, in consultation with President Biden, approved an FDIC resolution to effectively bail out these banks’ depositors. Shareholders and some unsecured creditors will not be protected and will lose all their investments.

Concluding remarks

Banking systems heavily rely on trust. In the aftermath of the GFC, in a bid to ensure confidence, regulators tightened what assets could be held on bank balance sheets and regularly stress-tested the sector. As a result, US government bonds holdings in the banking system rose dramatically in the post-GFC era.

However, the onset of Covid saw policy makers drive interest rates down to zero (and even negative). This helped to create a new tech boom and, with it, came a surge in demand for banking services from an explosion venture capital-backed tech startups.

In the case of SVB, its deposits nearly doubled and this required a similar rise in its assets. At the time of its failure, SVB held more than 40% of its assets in the form of long-dated Treasurys and mortgage-backed securities ─ “low-risk” investments that complied with post-GFC regulatory policy. But many of these bonds were purchased when yields were low and prices were high … at a time the US Fed was guiding for rates to stay low as part of the inflation its transitory narrative (sound familiar?).

This encouraged (if not incentivised) SVB to purchase too many of these securities under a classification of “held to maturity”, which formally prohibits hedging against interest rate risk, regardless of changes in market yields. SVB was doing the right thing by the regulators, but it quickly became a case of no good deed goes unpunished…

…And with the dominoes falling, the US Treasury designated both SVB and Signature Bank as “systemic risks”, giving it authority to unwind both institutions in a way that it said “fully protects all depositors.” For some, this will be seen as a win for the purveyors of moral hazard. Others will see it as the right thing to do by regulators, as it was partly of their own making.

An important component of the measures is that the US Fed will create a separate facility that will provide loans up to one year for institutions impacted by the bank failures. Institutions using the facility will be asked to pledge “high-quality” collateral such as Treasurys, agency debt and mortgage-backed securities (which no doubt will be carrying huge unrealised losses). This will allow banks to address liquidity issues without becoming forced sellers of securities that they were compelled and encouraged to purchase by the regulators.

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523

The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

The post Bank Failures and Market Volatility appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

Last night the Albanese Government announced it’s first adjustments to the Federal Budget.   The Federal Budget is a plan for how things will be spent and focus on what the Federal Government see’s as priorities as well as being a great transparency in our democratic system.

Labor’s first Budget was filled with measures aimed at easing the cost of living over the coming years, addressing the challenges of a slowing economy, and introducing investments designed to place Australia in a stronger position for the future. For superannuation and tax, the announcements were mainly re-commitments from earlier Budgets (so no big changes here). This includes the change to the eligibility age for downsizer contributions. The stage 3 tax cuts for 2024 are also unchanged. Instead of focusing on super and tax, most of the proposals centred around investing into key sectors and infrastructure, and providing affordable housing for more Australians through a new national Housing Accord.

The post Federal Budget 2022 V2 appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

What are the changes?

Originally announced in the 2021 Federal Budget, the following changes apply from 1 July 2022:

• Individuals up to the age of 74, will no longer need to meet a work test to make voluntary, non-deductible, contributions
• Individuals up to the age of 75, with a total super balance under $1.7 million, will have the opportunity to make large non-concessional contributions (possibly up to three years’ worth) in a single year
• The minimum age to make downsizer contributions will reduce to 60, allowing more individuals to use the proceeds from the sale of their home, to fund their retirement
• The Superannuation Guarantee (SG) rate will increase to 10.5% p.a. for all and the $450 minimum income threshold for SG contributions, will be removed
• Under the First Home Super Super Scheme (FHSSS) eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit.

How can you benefit from these changes?

The Work Test

Currently, if you are aged 67 to 74, you can only make voluntary contributions to super if you have worked at least 40 hours over 30 consecutive days in the financial year, or you satisfy the recently retired test.  The work test must be met prior to contributing.

From 1 July 2022, this work test will only apply to you if you wish to claim a tax deduction for the voluntary contributions you make to your Super Fund. If making personal deductible contributions, from 1 July 2022, you will be able to meet the work test at any time in the financial year.

This means that the work test will no longer apply to contributions you make under a salary sacrifice arrangement or for any personal contributions that you don’t claim a tax deduction for, such as non- concessional contributions.

Non-concessional Contribution

Currently, only if you were under the age of 67 on 1 July of the financial year, can you make non-concessional contributions which exceed  the annual $110,000 non-concessional contributions cap. Currently, the bring-forward rules allow you to make up to $330,000 (i.e. three years’ worth of non-concessional contributions), in a single year if your total super balances was under $1.48 million as at 30 June of the previous financial year, or $220,000 if your total super balances was greater than or equal to $1.48 million but less than $1.59 million as at 30 June of the previous financial year.

From 1 July 2022, the cut-off age to access the bring rules will increase to 75. However, the total super balance thresholds referred to apply above, still apply.

This means that if you are 74 on 1 July 2022 and you have a total super balance of less than $1.48m, you may be able to have one last boost to your retirement savings by making a $330,000 non-concessional contribution to your super fund. The contribution simply must be made, no later than 28 days after the month in which you turn 75.

Downsizer Contributions

Currently, you can only make a downsizer contribution if you are 65 or older at the time of the contribution and have satisfied the other eligibility requirements.

From 1 July 2022, the minimum age will reduce to 60. All other eligibility rules remain unchanged and the maximum amount of downsizer contributions that can be made remains at $300,000 per person or $600,000 per couple.

If you are selling your home and expect to receive the sale proceeds close to the end of this financial year, please contact our office to discuss the timing of a downsizer contribution and the potential to boost other contribution opportunities in 2022-23. For example, if you get the timing right, you may be able to combine a downsizer contribution with the bring forward rules to contribute up to $630,000 to your super fund in one year. As a couple this could present a one-off opportunity to boost your retirement savings by $1.26m.

First Home Super Saver Scheme (FHSSS)

Currently the FHSSS allows you to withdraw a maximum of $30,000 of voluntary contributions (plus associated earnings/less tax) from your super fund to fund the deposit of a new home.

From 1 July 2022, the maximum amount that can be withdrawn will increase to $50,000 meaning each eligible person will be able to withdraw an additional $20,000. All other eligibility rules remain unchanged.

Also unchanged is the maximum amount of contributions that an individual can make each year that can count towards the FHSSS – this remains at $15,000 p.a. This means that it will take a member, at least four years of voluntary contributions, to reach the higher $50,000 limit.

How can we help?

Navigating your way through the superannuation contribution rules can be very complex, especially in the lead up retirement or other big life transitions. If you have any questions, require assistance, or would like to discuss whether any of these opportunities apply to you, please feel free to give our office a call to arrange a time to discuss.

Seek out further advice and start your journey to being free around your money and creating wealth with understanding.

Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics.  Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra, Newcastle and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523

The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs.  Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs. 

The post 1 July 2022 and superannuation contribution changes appeared first on Financial Planner, SMSF Public Sector Super Advisers Advice Canberra & Melbourne - Money Mechanics.

This budget focuses on key spending measures to drive Australia’s economic recovery in a “post-pandemic, natural disaster and conflicted international environment”. The Government’s message in the lead up to the election has centred around job creation, temporary stimulus to low and middle income Australians, as well as infrastructure and regional recovery spending measures.

The budget position has improved dramatically from the forecasts delivered in the Mid-Year Economic and Fiscal Outlook (MYEFO) in late 2021. The deficit for 2022-23 is now expected to be $67.5 billion (down from $161 billion). This is largely due to a much stronger rebound in employment than was expected at the height of the pandemic last year. Revenue has also received a boost from strong household incomes, a tightening labour market, higher average wages driving stronger personal income tax and GST receipts, as well as strong bulk
commodity prices.

There are also a number of measures which will take effect immediately or soon, which are aimed at addressing the cost-of-living challenges currently facing Australians.

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