Treasurer Jim Chalmers delivered Labour’s second Federal budget on 9 May 2023.
This year’s Federal Budget focused on addressing the immediate challenges that many are facing and providing cost-of-living relief for those that need it most.
The Budget confirmed two previously announced changes to superannuation. – the reduction of concessions for those with balances exceeding $3 million and the increase in the payment frequency of the Superannuation Guarantee (SG) coupled with investment in the ATO’s enforcement of SG compliance.
Superannuation changes in detail
From 1 July 2026, employers will be required to pay employees’ super at the same time as wages. Currently, employers must pay the Super Guarantee at least quarterly. Payday super will make it easier for workers to track their super payments and ensure they’re not missing out on super they’re entitled to.
The proposed 2026 start date will give employers, super funds, payroll providers and other parts of the super system enough time to prepare for the change.
Proposed start date: 1 July 2026
Tax concession changes (for super balances above $3m)
From 2025-26, the concessional tax rate applied to future earnings on balances above $3 million will be 30 per cent.
This means anyone with total super balances over $3 million at the end of a financial year will pay an additional tax of 15 per cent on the earnings on any balance that exceeds the $3 million threshold. This tax is in addition to any tax super funds pay on earnings in accumulation.
Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests.
Start date: 1 July 2025
Minimum pension drawdown rate
The temporary 50% reduction in minimum drawdown rates has not been renewed. This means that the minimum account based pension drawdown rates from 1 July 2023 will revert to the standard minimum amounts.
Start date: 1 July 2023
The ATO will receive additional funding to help them engage more effectively with businesses to address the growth of tax and superannuation liabilities. This funding will happen over four years from 1 July 2023.
The additional funding is aimed at facilitating engagement with:
- taxpayers who have high-value debts over $100,000
- aged debts older than two years where those taxpayers are either
- public and multinational groups with an aggregated turnover of greater than $10 million or
- privately owned groups or individuals controlling over $5 million of net wealth
The Government estimates these measures will result in $12.3 million in outstanding unpaid super.
Start date: 1 July 2023 (over 4 years)
The Government also announced increased funding for ATO compliance for underpayment of super
The Government will provide $40.2 million to the Australian Tax Office in 2023–24 to improve unpaid super recovery rates. This consists of the following:
- $27.0 million to improve data matching capabilities to identify and act on cases of SG underpayment by employers
- $13.2 million for consultation and co-design
The Government will also set public targets for the ATO on recovering unpaid superannuation. The ATO will report annually against new measures set out in the Treasury Portfolio Budget Statement.
More budget information
Many of the measures announced will need to be legislated before they come into effect. Full details on the Federal Budget can be found at: budget.gov.au