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Super Budget 2023

Welcome to our latest newsletter, Budget Edition, in which we provide a brief summary of the few super related measures that were in the budget.

Please remember that the following budget announcements are not yet law.

Better Targeted Superannuation Concessions

The Government will be going ahead with its previously announced measure to reduce the tax concessions available to individuals with a total superannuation balance exceeding $3million, from 1 July 2025.

This reform is intended to ensure that 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.

Unless this proposed approach is modified, unrealised gains, accounting adjustments, and/or book entries and tax refunds will potentially be subject to this new tax.

Stay tuned to further developments.

Superannuation Guarantee – Changes to payment frequency

From 1 July 2026, employers will be required to pay their employees’ compulsory SG entitlements on the same day that they pay salary and wages. Currently, employers are only required to pay their employees’ SG on a quarterly basis.

This measure will increase the payment frequency of superannuation to align with the payment of salary and wages, ensuring employees have greater visibility over whether their entitlements have been paid and better enable the ATO to recover unpaid superannuation amounts.

Non-arm’s length income (NALI)

The Government is proposing to amend the non-arm’s length income (NALI) provisions that apply to certain expenses incurred by superannuation funds.

Specifically relevant to SMSF trustees, the Government is proposing to limit the level of a fund’s income that is potentially taxable as NALI to twice the level of the shortfall amount of the expense (it was previously proposed that it would be five times the level of the shortfall amount of the expense).

Additionally, fund income taxable as NALI will exclude contributions.

30 June 2023 Year End Reminder – Pension drawdowns and contributions

With 30 June 2023 fast approaching, here is a timely reminder of two very important issues to consider:

  1. If you are in pension mode, please ensure that you have withdrawn at least the minimum pension drawdown by 30 June 2023.
  2. For those taxpayers that are in accumulation mode and contributing to superannuation – please make sure that contributions are received by the super fund by 30 June 2023. This means that payments should be made several business days before then, to ensure that funds are cleared.

Also, just a quick reminder that the concessional contribution cap is $27,500 per member and the non-concessional contribution cap is $110,000 per member.

Minimum pension drawdowns from 1 July 2023

Minimum pension payments will no longer by reduced by 50% and will return to normal levels in 2023/24. Please bear in mind the need for extra cashflow when planning for the year ahead.

Also, it may be that some members considering making extra pension payments now (above the minimum required for 2022/23) may wish to consider holding off until July 2023 to make up some of next year’s payments.

As always, don’t hesitate to contact one of the friendly Greenlight Super Services team members if you require further assistance on (02) 6273 1066 or info@glss.com.au.

This newsletter is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The newsletter has been prepared without taking in to account any personal objectives, financial situation or needs. The information contained is correct as of 10 May 2023.

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