Two budget initiatives advisers should heed

Grace Bacon, director of financial services at RSM, believes there are two main budget initiatives that financial advisers must have on their radar — the extension of the downsizer contribution and the increase to the income test threshold for Commonwealth Seniors Health Card.

In its budget on Tuesday, Labor said it will allow more people to make downsizer contributions to their superannuation by reducing the minimum eligibility age from 60 to 55 years of age. The measure will take effect from the start of the first quarter after the Royal Assent of the enabling legislation.

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Moreover, for those over pension age, Labor confirmed that the income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

Commenting on these budget items, Ms Bacon said it’s critical for financial advisers to remain proactive in reviewing their clients’ situations.

“They will be able to talk to clients about ensuring they can take advantage of these new budget measures, as they are measures that clients may not previously have been eligible for or aware of,” Ms Bacon said.

Moreover, she said financial advisers should consider reviewing their client’s long-term goals and assess them against some of the benefits announced in the budget.

“For example, the increase in the income threshold for the Commonwealth Seniors Health Card has created opportunities for many older Australians to qualify for this benefit. This will help them combat the current rising cost-of-living pressures by reducing their cost of healthcare, utilities and transport. They may also be eligible for ad-hoc economic support payments,” Ms Bacon said.

“When assisting clients with retirement planning, financial advisers should review their clients’ situations and stay on top of any new super measures such as the new minimum age eligibility for downsizer contributions to enable clients to maximise their contributions to super and boost their retirement funding in a tax effective environment.”

For more budget reactions, click here.

For an overview of the 2022 Labor budget, click here.