SUPERCentral News

The recent Commonwealth Budget contained 4 material superannuation proposals. The most significant proposal (additional 15% tax on fund earnings on super balances of $3m or more) had been previously announced. The superannuation proposals detailed in the Budget are set out in this article.

Additional 15% tax on large super balances - the new Division 296 Tax Consultation Paper released!

From 1 January 2023, the age at which you can be a beneficiary of a downsizer contribution has been reduced to age 55 (previously it was age 60 and some years ago it was age 65). This change has been implemented by Treasury Laws Amendment (2022 Measures No 2) Act 2022 (No 84 of 2022).

With these words the Treasurer (and also the Assistant Treasurer and Minister for Financial Services) advised that the Government will impose a special rate of earnings tax of 30% on earnings on super balances of $3m and above. This change, the details of which are yet to be released, will apply from 1 July 2025.

Is it possible to make a last minute withdrawal before you die and the payment, if made after you have died, still be treated as being tax free? Well Yes – according to a recent private binding ruling from the Commissioner (PBR 1051988780639). But first some imaginary background to set the scene…

You may be aware that toward the end of 2021, in a private ruling, the ATO confirmed the tax payable in respect of a gift of superannuation to a member’s estate where that super is to be held in a testamentary discretionary trust.

When Downsizer Contributions were first introduced (1 July 2018) the eligibility age for the beneficiary (that is the person for whom the contribution was made) of a Downsizer Contribution was age 65.  The eligibility age requirement does not apply to the maker of the contribution.  Consequently, an individual who is aged 60 could have made a Downsizer Contribution for a spouse who is aged 66.  However, that individual could not make a Downsizer Contribution for him or herself.