Superannuation Tax on Funds above $3 million
The Government is moving forward with measures to cut back tax concessions for those with a total superannuation balance exceeding $3 million, effective from 1 July 2025.
This strategy aims to make superannuation concessions more focused and sustainable, increasing the headline tax rate from 15% to 30% for earnings that exceed an individuals’ total superannuation balance of $3 million.
The Government has also clarified that for fund assets below the $3 million threshold, the tax rate will remain at 15% or potentially 0.5% if the funds are in a retirement phase pension account.
Announced prior to the 9 May Budget address, no new information was revealed on the night.
Superannuation “Payday” in-line with Salary & Wages
Announced ahead of Budget night, from 1 July 2026, employers will be required to pay superannuation payments for employees on “payday” – meaning at the same time as ordinary salary and wages.
Under current legislation, employers are required to pay Superannuation Guarantee Contributions into employees’ nominated funds every quarter. The new change (yet to receive Royal Assent) aims to better off the average worker in retirement by providing more time for compounding interest due to greater frequency of payments.
Additionally, in introducing the new change, the Labor Government aims to crackdown on unpaid superannuation payments owing to employees, with Australian Tax Office also to receive greater resources to detect unpaid super payments earlier.
No Change to Minimum Pension Drawdowns for 2023/24
The 2023/24 Federal Budget did not announce any further extension to the temporary 50% reduction in the minimum annual payment amounts for Superannuation pensions and annuities.
Introduced in the 2020 Budget to assist against the impacts of the global COVID-19 pandemic and applied to the 2019-20 to 2022-23 income years, the minimum pension drawdowns reduction is set to conclude at 30 June 2023.
Superannuation trustees and members will need to start planning for the additional cash flow requirements to satisfy the minimum annual payment amounts for 2023-24.
Minimum annual payment amounts for the 2023-24 year are determined by age of the beneficiary and the value of the account balance as at 1 July each year.