On 6 October, the Government delivered the 2020-21 Federal Budget. The Budget, which was originally due to be delivered in May 2020, was delayed due to COVID-19.
The broader impact of the global pandemic was reflected on the measures announced as part of this year’s Budget. As part of the Budget the Treasurer outlined the economic recovery plan for Australia through tax relief, encouraging job creation, rebuilding our economy and securing Australia’s future. The Budget has been designed to accelerate Australia’s road to recovery, with measures designed to put more money in the pockets of Australians through acceleration of personal income tax measures, or through incentives to get support to business.
Of particular significance, is that there are no changes impacting investment bonds or the investment bonds tax structure. This has been a constant theme since 2001 and confirms the stability of the investment bond structure and its associated benefits.
There were no changes announced impacting estate planning, and in particular the taxation and transfer benefits to both dependants and non-dependants attached to investment bonds for estate planning purposes.
The Government will bring forward the legislated increase in the 19% and 32.5% income tax thresholds from 1 July 2022 to 1 July 2020 which will see a marginal improvement in after tax income levels. There has been no change to the higher marginal tax rates at 37% and 45%. Furthermore, no changes were announced to the treatment of taxation for minors, with the current maximum rate of 66% still applicable.
The Government will provide an additional 23,000 home care packages over four years from 2020-21 across all package levels. This may provide opportunities for you to review home care fees and aged care fee arrangements, including a review of a client’s assets position to potentially reduce daily care fee levels or improve pension entitlements.
The recent Budget announcement is a timely reminder of the importance of after tax income, investors are becoming more sensitive to what ends up in their pockets versus a gross return. At Generation Life, we’re very excited to soon be launching our new Tax Aware Series of Investment Options, designed to increase after tax returns through smart tax management. Reinforcing our brand as a market leader of after-tax returns.
If you’re interested in finding out more about our market leading approach to delivering superior after-tax returns, without additional investment risk. Please contact your Generation Life Business Development Managers.
The team at Generation Life look forward to continuing to support financial advisers and their clients throughout this uncertain and turbulent period.