July 1 has come and gone and new financial year changes mean there’s money to be made, saved and returned – at least for those willing to do the admin.
The new financial year makes winners out of those willing to take charge of their finances, whether it’s filing a tax return, negotiating a new energy deal, or buying a house.
The 2021 new financial year is particularly lucrative for those willing to get busy, with huge tax returns and electricity savings on offer.
Let’s run through the big changes and what they mean for your wallet.
July 1 means whopper tax returns
First up, you’ll want to organise your 2020-21 tax return ASAP.
That’s because an extension to the low-and-middle-income tax offset (LMITO) is creating handsome returns, and who doesn’t like extra cash?
The LMITO is worth between $255 and $1080 depending on your income, as we explained in a previous story.
You’ll also want to maximise your expense claims this year, especially if you have been working from home during the pandemic.
Other July 1 tax goodies include:
- The tax rate for small businesses ($50 billion turnover or less) has fallen from 26 per cent to 25 per cent
- Granny flats are now exempt from capital gains tax (CGT)
- Small breweries can access tax relief through a new remission scheme, with an annual cap of $350,000, which hopefully means cheaper craft beer for customers.
July 1 is also a great opportunity to renegotiate your electricity bill.
That’s because the regulator-set ceiling price known as the default market offer (DMO) has been lowered, changing the distribution of prices offered by energy retailers.
The DMO price has fallen by between $340 and $557 across markets in NSW, south-east Queensland and South Australia, while Victoria has its own price ceiling and other states aren’t included.
The key takeaway here is that you don’t want to be one of the 700,000 Australians stuck on the DMO.
It is the highest price at which retailers can legally sell energy and is about 18 per cent above the median market offer at the moment.
The good news is that market offers will also fall in line with the DMO, meaning it’s a great time to shop around for a better deal.
The table below should give you a good reference point to compare the value of your current deal.
It breaks down the cheapest and most expensive deals in five of the eight states and territories.
It has been a rough few months for those saving for a first-home deposit: House prices are skyrocketing and money isn’t getting any cheaper.
But there’s some good news among the July 1 changes for those trying to get a foot on the ladder.
The federal government’s home buyer grant schemes have expanded, with an additional 30,000 places on offer this year across the First Home Loan Deposit Scheme, the New Home Guarantee Program and the Family Home Guarantee.
These places are split evenly across the three programs, meaning each has 10,000 new places, although the Family Home Guarantee (available to single parents) will run over four years.
Price caps have also lifted across the programs, which will make it slightly easier for people to contend with higher prices.
Under the changes, first-home buyers in Sydney will be able to buy houses worth up to $800,000 with a deposit of just 5 per cent, while single parents can submit applications with a 2 per cent deposit.
The table below breaks down the price caps imposed across each state and territory.
You should receive more superannuation this financial year after the super guarantee increased from 9.5 per cent to 10 per cent on July 1.
It’s worth paying close attention to your payslip though, as your employer may attempt to fund the increase through a reduction in your take-home pay.
This isn’t illegal in all cases, but it is for many workers, so check out our guide on what you need to know to work out whether you could be affected.
Under legal changes passed last month, superannuation funds are also now required to pass an annual performance test, and if they fail they’ll have to inform their members and could even be prevented from signing up new people.
Other changes will allow self-managed super funds to have a maximum of six members, up from four.