The July 1 changes that will put more money in your pocket

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As you wake up this morning, bleary-eyed, and reach for your phone to read this column (which I assume is the first thing all of you do on Sundays), it’ll be almost exactly one week from the end of financial year. I know, I know, it might be hard to contain your excitement, but in big news for accountants everywhere, July 1 is just around the corner.

For a long time, I believed that the end of financial year was a bit of a silly thing that was only relevant to corporates and people who worked in finance, and was usually just an excuse for companies to have a mid-winter staff party.

Get excited: EOFY means more cash in your pocket.Credit: Michael Howard

I still mostly believe this, but now I also know that July is when you can get that sweet, sweet tax return, so at least now there’s something in it for me.

What’s the problem?

However, there’s actually a ton of other interesting things that happen in July by virtue of it being the end/beginning of the financial year. A lot of legislation is written with July being the start date, and, similarly, anything that increases over time (such as shifting tax brackets) will come into effect on July 1. Maybe all these accountants are onto something after all.

What you can do about it

With so many things changing in July, it can be difficult to keep track of them all, so here’s a handy list of everything you might need to be across in the personal finance space:

• Super guarantee increases: After what feels like forever, but has realistically only been about five years, the super guarantee (the percentage of your salary your employer is required to pay to your super account) will finally increase to 12 per cent, finishing its incremental climb from the 9.5 per cent level it was at in 2021. This change could see a 30-year-old earning $100,000 with an additional $125,000 in super by the time they retire, but TelstraSuper chief executive Chris Davies says employees should be vigilant and make sure their employer is actually paying them what they’re owed. “The guarantee is calculated based on your ordinary time earnings. Unless you’re on a total remuneration package, the increase will be paid on top of your base salary,” he says. If you are on a total remuneration package, it’s worth checking whether your employer will be funding the increase, otherwise you could get an unexpected decline in your take-home pay come July. “Talk to your employer if your super contribution doesn’t look right, or you haven’t noticed an increase in super payments,” Davies says. “If you think your employer isn’t paying your super or the right amount, you can contact the Australian Tax Office for help.”

• Better paid parental leave: As part of the Albanese government’s improvement of the paid parental leave scheme, parents who access government-funded parental leave will be able to receive 24 weeks of pay, up from 22. Crucially, those payments will now accrue superannuation for the first time, a move that will go a small way towards closing the superannuation gap between men and women.

• Minimum wage rise: From July 1, the national minimum wage will rise 3.5 per cent to $24.94 an hour, and wages set under awards will rise the same amount too. This will deliver an additional $32 a week for the country’s lowest paid workers.

• Pension rate increases: From July, the rate of the age pension for asset-tested couples will increase by $34.50 a fortnight, and $22.50 a fortnight for singles. While this might not seem like much, it can make a big difference for some pensioners, and with changes to the asset-test cutoff points too, retirees could find with more in the bank than expected. “Whatever your situation, as the rules evolve, it’s worth reviewing your position to see if a few small changes could improve your cashflow,” Noel Whittaker wrote this week.
• The end of some tax deductions: In bad news for some taxpayers, director of tax communications at HR Block, Mark Chapman, says the ATO is shutting the door on some available deductions in July. He says any interest charged to you by the tax office – for an overdue or unpaid tax debt or other fee – will no longer be tax-deductible, a move the ATO says is designed to encourage timely payment of tax and compensate the community for the cost of late payments. The ATO’s general interest charge is currently charged at 11.17 per cent and compounds daily, so this is a change that could add up for anyone with serious overdue tax debts.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.