Jun 07, 2023 / News

Federal Budget / Superannuation

Federal Budget Announcements 2023

The Federal Treasurer, Dr Jim Chalmers, brought down the 2023-24 Federal Budget on 9 May. In this issue we look at three announcements which directly affect our superannuation clients:

• A new additional 15% tax on fund “earnings” starting in the 2025-26 tax year where a member’s total super balance on 30 June exceeds $3m (first announced 28 February);
• Bringing forward the deadline for the payment of compulsory SCG super contributions, so they must be paid at the same time as salary and wages (first announced 2 May), and
• Clarification on the tax consequences of a super fund incurring general expenses of less than an arm’s length amount.

We also note that there was no announcement on:

Indexation of the General Transfer Balance Cap

The general transfer balance cap is indexed in multiples of $100,000 by movements in the CPI. It is due to increase from $1.7m to $1.9m on 1 July 2023. There has been some speculation on whether the Federal Government would act to stop the increase. In the absence of any announcement to the contrary, the expected increase is likely to go ahead.

Minimum Pension Payment Factors

Super law requires that a minimum annual amount be withdrawn from an account based pension, based on the size of the pension account at the beginning of the financial year and the age of the member. Since the 2019-20 year these factors have been reduced by 50%, to take account of various economic factors and the effect of COVID-19. There has been no announcement that the factors will be reduced again in the 2023-24 year, so they are likely to return to their original percentages, as below:

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.