Price rises coming in 2021 and a tax bonus

There are increases in bills heading our way in the next few months but it’s not all bad news with a tax bonus to come mid-year.

The cost of living is set to rise again this year with household bills, from insurance through to energy, costing Aussies more.

Private health insurance alone will be rising by an average of 2.74 per cent on April 1, which will hit the hip pockets of the average Australian family by around $127 extra a year.

Savings expert Penina Petersen, believes a budget calendar could be key to avoiding bill shocks and months of doing it tough.

A budget calendar is much the same as a normal calendar but serves as a visual reminder of when money will come in and bills are due.

“Finances fail without a good plan. Budget calendars help you forecast so you can plan ahead and also factor in the unexpected,” she says.

“Calendars help you to never miss a bill, which keeps your all-important credit score high and, you’ll achieve an overall sense of calm knowing what’s happening with your money.”

To keep your budget flourishing, note down the following dates, which are guaranteed to have an impact on your household bills.

THREE KEY DATES TO KNOW

HEALTH: April 1

Health insurance premiums will rise by an average of 2.74 per cent on April 1 — the second increase in just six months for many policy holders.

This latest increase comes at a time when many Aussies are already under increased financial pressure and estimates show that this rise could cost the average family $127 extra a year and the average single $59 more a year.

There is one way to avoid paying the extra this year, according to spokesperson for comparison website iSelect, Laura Crowden.

“If you’re in a position to do so, prepaying your annual premium upfront for the full year before April 1 will lock in your current rate and help you avoid the 2021 premium increase for another 12 months,” she said.

“Customers concerned about the cost of their health insurance should first explore more affordable options rather than simply cancelling their cover altogether. For example, in NSW, there can be as much as $1800 per year difference between some gold family policies, and up to $840 difference between some gold singles policies.”

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TAX: June 30 and October 31

The new financial year starts on July 1, which means you can submit your tax return from June 30.

The deadline for tax returns is October 31 and if you miss it you might cop a fine depending on whether you owe the ATO money.

If you expect to get a refund, you won’t be penalised for late lodgement. But if you owe the tax office money, late lodgement means you’ll get a fine.

Another reason to get your tax return in is because many of us will be getting a tax bonus in our 2021 returns due to tax cuts implemented by the Federal Government in October 2020. Workers have been receiving half of these tax cuts in their pay since about October or November, and will get the portion backdated to July in a lump sum in their tax returns – which is about four to five months worth of tax cash.

Other good news for 2021 year is that if you worked from home this financial year, you can still claim a rate of $0.80c per hour for all running expenses, including:

• Electricity – this covers lighting, cooling or heating and running electronic items like your work laptop.
• Cleaning costs – this covers cleaning costs for your dedicated work area.
• Phone and internet expenses – including the decline in value of your phone.
• Printer paper, toner and ink
• Stationery
• Home office equipment – this covers chairs, desks, etc up to the value of $300.
• Declines in value of certain items – this includes office furniture and furnishings, computers, laptops and similar items over $300.

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Savings expert Penina Petersen, believes a budget calendar could be key to avoiding bill shocks.

ENERGY: July1

The good news is, this date is when the cost of electricity and gas should go down.

However, although other deregulated states (NSW, SA & SE QLD) are expected to decrease prices from 1 July 2021, so far only those who live in Victoria can definitely expect their bills to fall.

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This doesn’t mean everyone will automatically see their bills decrease though. And, says Crowden, many could be paying more than they need to be.

“You could be paying more than you need to, especially if you’ve been on the same plan for a while, especially if you’ve unnecessarily stayed on outdated plans long after the initial introductory rate or conditional discount period expired.

“Customers on standing offers (VDO) will see their bills automatically decrease by around 10 per cent although even with this reduction the VDO will still be higher than many market offers currently available.”

Although Crowden stressed that the energy price decrease is currently only available in Victoria, she recommends that everyone shop around for a new deal on energy.

“According to our research, of those who switched in the past two years, the average reported saving is $84 a quarter or $336 a year,” she says.

Originally published as Price rises coming in 2021 and a tax bonus