happy new year: these 7 things change from today
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What changes are happening in the new financial year?
The 1st of July, 2026. It's the new financial year. Happy New Year. Thanks for joining me. Just jumping on because I want to go through seven things plus a bonus eight that is happening on the 1st of July, this new financial year. Okay, the first thing, there is a small income tax cut. So the 16% tax rate between $18,201 and $45,000 is dropping to 15%. So there's a 1% drop in that tax bracket. If you earn more than $45,000 a year, the most you'll save is $268 this financial year. Now, At the time of recording on the 24th of June, there is also the $1,000 instant work-related deduction. Right as at today, it is not legislated.
How will the income tax cut affect my finances?
I'd expect it's going to get legislated in the coming fortnight, along with the budget changes. I think it's going to be part of that package in the parliament. The second thing that's changing is the paid parental leave. Now it's going to be 130 days or 26 weeks. For couples, 20 days are reserved for the other parent on a use it or lose it basis. It's basically going to be... $26,127 before tax in total. The super on the government parental leave is also paid, but that started from children born on the 1st of July last year, so that's kind of already happening. Before we get into it, this show is general advice only. I've got a license to provide that advice. Full details can be found in the show description.
My name's Glen James, former financial advisor. I hosted this show and a show called Retire Right. I've got some books, the award-winning Quick Start Guide to Investing and the Quick Start Guide to Your First Property available where good books are sold or in the description. If you're new here, welcome. If you're an old hand, welcome to M3. Let's get into it right now. Okay, the third thing, a little bit controversial, but I think it's actually a good thing. I think the controversial part of this was from maybe businesses that weren't on top of their cash flow or systems, and that is payday super. Employers must pay super the same time as they pay the wage, which basically means it needs to be in the employee's super account within seven days.
A couple of things. The rate is still 12%. And Subaru is now calculated on qualifying earnings slightly broader than the traditional ordinary time earnings. An example of that is commission payments, for example. They're now going to get included in that 12%. Fourth thing, the minimum and award wages rise. So the national minimum wage becomes $1,004.90 per week or $26.44 per hour, which is about a 6% increase. The minimum award wages rise by 4.75. So they're two different increases. So just check which applies to you. It's important as well. Like a lot of our audience, just because of the nature of the listeners of this show, are nowhere near minimum wage territory. But if you're on the minimum wage, you will get a pay increase.
All right, what have we got? One, two, three, four. The fifth one. If you have a help debt, the repayment threshold rises, and that is from $67,000 to $69,528. So if you were earning $67,000 last year, you would have had money garnished from your salary. If you're earning $67,000 this year, you'll get an effective after-tax pay increase because you won't be paying your health repayment. Number six, the super contribution caps, they are going up. So the concessional before-tax contribution, which includes your 12% SG, is now $32,500. So if your employer put $12,500 a year in to your super this financial year, you basically got a $20,000 usable cap that you can salary sacrifice, put personal deductible contributions in.
So the cap is increasing. They generally increase every three years The non-concessional after-tax cap is $130,000 of post-tax dollars, which brings the three-year bring forward amount to $390,000. If you're cashed up and you want to throw $390,000 into your super fund, you can do that. the balance transfer cap also increases to $2.1 million, which is effectively the amount that you can have in superannuation, in pension phase, and not paying any tax on the growth of earnings.
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