Budget 2023

1 June 2023

 

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 below.

 

1. Non-arm’s length expenditure (NALE)  

  • Non-arms’ length expenditure provisions will not apply to expenditure incurred prior to 1 July 2018
  • Large APRA funds (retail funds, industry funds, employer funds) will be excluded from this measure
  • SMSFs and small APRA funds (ie funds regulated by APRA which have less than 7 members) will be subject to this measure
  • If the offending expenditure is a general expense - fund income treated as being tainted by a NALE general expense is to be assumed to be 200% of the value of the arm’s length value of the general expense
  • Fund income taxable as NALI will exclude contributions
  • seems to be a general exclusion for NALI and NALE purposes
  • presumably measure will apply from 1 July 2018
  • dramatically and favourably changes ATO’s view that a general expense (ie expense which is not entirely related to a particular asset, say audit fees, accounting fees) tainted all income of the fund

REFERENCE: Page 14 of Budget Paper No 2

 

2. Better Targeted Superannuation Concessions

  • Previously announced on 28 February 2023
  • Additional 15% tax on “earnings” related to super balances in excess of $3m
  • Applies from 1 July 2025 (ie first additional tax will be in respect of “earnings” derived in respect of the 2025/26 financial year)
  • Refer to the April 2023 issue of SUPERCentral News for details of this proposal - read it here.

REFERENCE: Page 15 of Budget Paper No 2

 

3. SG Contributions – aligning payment frequency to salary payment frequency 

  • Change from quarterly payment in arrears of SG contributions to align payment frequency with salary payment frequency, ie if salary is paid monthly then SG will also be paid monthly
  • Applies from 1 July 2026
  • Employers will need to ensure payroll software is capable/ready for this change
  • Employers will need to plan cashflow, particularly for July 2026 when the payment for SG for March quarter will overlap with the first weekly/fortnightly/monthly salary run

REFERENCE: Page 26 of Budget Paper No 2

 

4. Work Bonus income bank scheme – extension to 31 December 2023

  • Previously this scheme was to finish on 30 June 2023, now it will finish on 31 December 2023.
  • Will affects age pensioners who are in gainful employment by mitigating the impact of gainful employment income on their age pension

REFERENCE: Page 201 of Budget Paper No 2

 

NOTE:  This article was prepared as at May 2023.  The article has not been updated in light of subsequent developments.

Back Enquiry