Most Aussies have had the opportunity to save up some money during lockdown. Many of our usual activities such as eating out, commuting to work and going on holiday were put on hold. This has led to many people cutting back on their expenses and rethinking their finances.
The Mid Year Economic and Fiscal Outlook reported that the household savings ratio is now at 19.8%. This is up from 6% in March 2020. The household savings ratio measures total net savings as a percentage of household disposable income. So it seems that missing out on those Friday night dinners has helped make a difference to our savings.
For those considering buying a new home these extra savings can go towards a home deposit. Government incentives such as the First Home Loan Deposit Scheme and Home Builder Grant can also help you meet your deposit sooner. This is particularly great for first-home buyers, who may have the opportunity to finally own their own home.
However, if you are not quite there yet with your savings the Government is providing some extra support. As part of the 2020 Budget the Government has brought forward tax cuts to help you save money.
Under these tax cuts, some of the tax brackets for individuals have been lifted. For the 2020-21 tax year the 19% tax rate threshold will increase from $37,000 to $45,000. The 32.5% tax rate threshold will also increase from $90,000 to $120,000.
How much money you can save on your tax return will depend on your taxable income. For example, if you are on a $50,000 income, this could save you $1080 in tax. If you are on a $100,000 income, you could save $1530 in tax.
These tax cuts can help put some extra cash back into your pocket and help you save for a home deposit. Additionally, with less income going towards tax it may increase your borrowing capacity. This can help you enter into the property market sooner or potentially afford a different home.
Talk to a Suitable Loans Mortgage Broker.