Against a backdrop of high inflation and global economic pressures, the Albanese Government’s 2023/24 Budget focuses on providing cost of living relief and re-targeting spending. There were few changes to superannuation and most of these had previously been announced by the Government.

It’s important to remember that the Budget measures outlined need to be legislated before they come into effect.

Read on for more details about the proposed measures.

Change to tax rates for super balances over $3 million

As previously announced, the Government proposes to change the concessional tax rate on earnings for super accounts with balances of more than $3 million. The tax rate is proposed to increase to 30% (for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million), up from 15%, from the 2025/26 financial year. The proposed adjustment is not retrospective and does not impose a limit on the size of super account balances in the accumulation phase.

All businesses to pay super at same time as wages by 2026

Announced earlier this month, the government plans to require employers to pay the Superannuation Guarantee for their employees on the same day as their salary and wages are paid. Currently, employers are only required to pay their employee’s Superannuation Guarantee on a quarterly basis.

Extension to pension work bonus

The Government proposes to extend a measure (introduced in the October 2022 Budget) that provides age and veteran pensioners a once-off credit of $4,000 to their “Work Bonus income bank” until 31 December 2023.

Under this measure, pensioners can earn up to $11,800 before their pension is reduced, supporting pensioners who want to work, or work more hours, to do so without losing their pension.

Reminder of some of the other key measures coming into effect from 1 July 2023

• The contributions that your employer is required to make into your super fund, the Superannuation Guarantee, will rise from the current rate of 10.5% to 11%.
• The temporary 50% reduction of the minimum pension drawdown rates, introduced during the Covid pandemic, will end on 30 June 2023. The government’s standard minimum drawdown rates will apply from 1 July 2023.
• The general Transfer Balance Cap will increase from $1.7 million to $1.9 million. The rules are complex and every individual will have their own personal transfer balance cap between $1.6 and $1.9 million, depending on their circumstances. This cap is the maximum amount of your superannuation which can be transferred from the accumulation phase to the retirement phase, where investment earnings are tax-free.
• The Total Super Balance cap will increase from $1.7 million to $1.9 million.
• The maximum government super co-contribution entitlement remains at $500, however the lower-income threshold increases to $43,445 and the higher-income threshold increases to $58,445.

You can also find more details on all the Federal Budget announcements at budget.gov.au.

Need some help with your super?

If you need assistance in making financial decisions, you can get general and simple personal advice about your TelstraSuper account over the phone at no additional cost. Alternatively for more wide-ranging advice, call and ask about TelstraSuper Financial Planning’s Comprehensive Advice service.

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