2023-2024 Federal Budget - Superannuation & Funds

Superannuation & Funds

Better Targeted Superannuation Concessions

The Government will reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025. This reform is intended to ensure generous superannuation concessions are better targeted and sustainable. It will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual's total superannuation balance that is greater than $3 million. This rate remains lower than the top marginal tax rate of 45 per cent. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15 per cent or zero per cent if held in a retirement pension account.

The additional tax on earnings imposed by this measure will impact around 80,000 individuals in 2025-26, or approximately 0.5 per cent of individuals with a superannuation account. The measure will not place a limit on the amount of money an individual can hold in superannuation. The current contributions rules continue to apply.

This measure is estimated to increase receipts by $950.0 million and increase payments by $47.6 million over the 5 years from 2022-23. This includes $50.0 million in receipts associated with updating the notional contribution calculation methodology, applicable to all defined benefit members. In 2027-28, the first full year of receipts collection, the measure is expected to increase receipts by $2.3 billion.

Budget Speech p 14
Budget Paper No 2 p 15
Budget Overview p 63
Media Release

Securing Australians' Superannuation Package - increasing the payment frequency of the Superannuation Guarantee (SG) and investing in SG compliance

From 1 July 2026, employers will be required to pay their employees' SG entitlements on the same day that they pay their salary and wages. By increasing the payment frequency of superannuation to align with the payment of salary and wages, this measure will both ensure employees have greater visibility over whether their entitlements have been paid and better enable the ATO to recover unpaid superannuation.

Changes to the design of the SG charge will also be necessary to align with increased payment frequency.
These changes are estimated to increase receipts by $835.0 million and decrease payments by $285.0 million in 2026-27, due to the bring forward of superannuation tax receipts on SG contributions. However, this effect will be immediately offset by the associated company tax deductions of SG payments in 2027-28. Over the medium term from 2022-23 to 2033-34, the proposal is estimated to reduce the underlying cash balance by $256.6 million as there will be less SG charge debt raised due to increased compliance.

The Government will also provide $40.2 million to the ATO in 2023-24, which includes $27.0 million for the ATO to improve data matching capabilities to identify and act on cases of SG underpayment by employers and $13.2 million for consultation and co-design. In total, this package is estimated to increase receipts by $835.0 million and decrease payments by $243.1 million over the 5 years from 2022-23.

Budget Paper No 2 p 26
Budget Overview p 62
Media Release

Amending measures of the former Government

The Government will amend measures announced by the former Government to provide greater certainty to taxpayers:

• Amend the start date of the 2016-17 MYEFO measure: Tax integrity - franked distributions funded by capital raisings from 19 December 2016 to 15 September 2022.
• Amend the start date for some components of the 2022-23 March Budget measure: Streamlining excise administration for fuel and alcohol package from 1 July 2023 to 1 July 2024. The changed start date applies to the measures that:
  • remove overlapping Australian Border Force and ATO systems (Uniform Business Experience)
  • streamline license application and renewal requirements
  • remove regulatory barriers for excise and excise equivalent customs goods (including lubricants, bunker fuels for commercial shipping industries, and vapour recovery units)
  • further, the ATO will publish on its website a public register of entities that hold excise licences to store or manufacture excise and excise equivalent customs goods, from 1 July 2024.
• Amend the non-arm's length income (NALI) provisions that apply to expenditure incurred by superannuation funds by:
  • limiting the income of self-managed superannuation funds and small Australian Prudential Regulation Authority (APRA) regulated funds that are taxable as NALI to twice the level of a general expense. Additionally, fund income taxable as NALI will exclude contributions
  • exempting large APRA-regulated funds from the NALI provisions for both general and specific expenses of the fund
  • exempting expenditures that occurred prior to the 2018-19 income year.

Budget Paper No 2 p 13

Tax Integrity - improving engagement with taxpayers to ensure timely payment of tax and superannuation liabilities

The Government will provide funding over 4 years from 1 July 2023 to enable the ATO to engage more effectively with businesses to address the growth of tax and superannuation liabilities.

Budget Speech p 14
Budget Paper No 2 p 29