New financial year 20/21: What’s in store for your finances?

Now that the new financial year is upon us, Aussies can expect a whole heap of changes to their household finances that will (hopefully) make life a little bit easier. We run through a few of the main ones below.

Open banking

As of 1 July 2020, individual customers will be able to authorise their banks to share personal data with rival banks as part of the Consumer Data Right (CDR), eliminating some of the hurdles many face when switching banks.

According to ACCC Commissioner Sarah Court, the move will give consumers ownership over information banks already collect about them, and make it easier to negotiate better deals.

“[The Consumer Data Right] allows consumers to share that data with other businesses, such as fintechs, that may be able to provide them more personalised services and competitive offers.”

At the moment, only data from credit cards, debit cards, savings accounts and transactions accounts can be shared. But from 1 November 2020, the CDR will extend to home loans, investment loans, personal loans and joint accounts.

Energy market upgrades

A similar initiative is also being drawn up for the energy sector. Like open banking, it will make it easier for customers to access and leverage their energy data to lock in a more competitive deal.

While this new framework hasn’t been rolled out yet, customers can still expect some major changes to their energy bill over the coming months. As part of the 1 July price changes, a number of retailers will be lowering electricity and gas prices for both residential and small businesses customers. 

In Queensland and South Australia, electricity customers will see decreases of between 4% and 5%. Meanwhile, customers in New South Wales and the Australian Capital Territory can expect much smaller decreases of between 0.6% and 0.7%. 

Tax time

The coronavirus pandemic has cleared out once bustling office districts and made working from home the norm for thousands of Australians. And with tax time upon us, homebound workers might be wondering if they’ll be able to claim any running expenses.

To simplify matters, the Australian Taxation Office (ATO) has introduced a method for calculating tax deductions, known as the ‘shortcut method.’

Under the shortcut method, anyone who has been working from home between 1 March and 30 June will be able to claim expenses at a rate of 80 cents per hour. That means the typical full-time worker could be looking at a refund of around $550.

However, if you were working from home before March, or have been logging expenses like internet and energy usage and other equipment costs, you might be able to claim a larger refund by opting for the traditional (though more time-consuming) approach.

RELATED: 5 surprising things you can claim as tax deductions this year

If this is your first time paying taxes and you’re unsure where to start, ATO Assistant Commissioner Karen Foat says the first thing on your list should be linking your myGov account to the ATO’s online services.

“Most people with simple tax affairs can lodge in under half-an-hour from the comfort of their own homes. For most people a lot of their income will be automatically included in their return by the end of July, making it even easier,” she said.

Another thing to keep in mind is that employers have until 31 July to finalise your income statement, so you’ll have to make sure the information in your statement is marked ‘tax ready’ before you lodge. 

“We often see people too eager to get a tax refund making obvious mistakes, which can either delay processing the tax return or result in a bill later on,” Ms Foat said.

And remember that if you’re lodging your tax return yourself, you’ll have to do so by 31 October 2020. If you’ve decided to go through a tax agent, you’ll have until 15 May 2021.

Early superannuation withdrawal

Back in March, the government announced that Australians who have lost their job as a result of the coronavirus pandemic will be able withdraw $20,000 from their super, spread out over two tax-free tranches in this financial year and the last. 

While the goal is to provide relief for those on shaky financial footing, Australians should weigh the pros and cons of dipping into their super before making any decisions. 

The first thing to consider is that even a small withdrawal could result in a significantly depleted balance come retirement, particularly for young Australians. According to BDO superannuation partner Mark Wilkinson, $10,000 in super today could be worth $160,000 in 40 years’ time.

There have also been some eyebrow-raising reports of people misusing their withdrawn funds, such as by spending it on alcohol or gambling. 

Right now, the ATO is taking steps to ensure that the only people who make use of the scheme are those in dire need, and has warned that anyone accessing their super without first meeting the eligibility requirements could face fines and prosecution.

First Home Loan Deposit Scheme

Anyone hoping to take their first steps up the property ladder will be happy to hear that the second round of the First Home Loan Deposit Scheme has officially gone live this month. 

The scheme allows first homebuyers to purchase a home with a deposit of as little as 5%, with the government guaranteeing the remaining amount. That means eligible Australians can avoid having to purchase Lenders Mortgage Insurance - which can cost upwards of $10,000 - and begin their home ownership journey sooner.

If you’re hoping to take advantage of the scheme, there are a few things you should be doing now to make sure you have the best possible chance. The first, of course, is to read over the eligibility criteria to see if you qualify. 

If you tick all the necessary boxes, you’ll then have to get cracking on your tax return, as you’ll need to submit a Notice of Assessment from the ATO for the last income year. Beyond that, it’s a good idea to have all the relevant documents handy, and be ready to prove your savings are genuine.

Visit our home loan comparison page to compare loans. And for a more in-depth look, browse our home loan statistics page, where you’ll be able to find information on lending trends, top rates and more.