Superannuation was not a source of significant surprises in this year’s Federal Budget, as many of the changes announced had already been previously discussed. However, these changes are still important to consider when planning your superannuation strategies for the next financial year.
$3 Million Super Balances & Tax
As announced in March 2023, extra tax will need to be paid on the earnings associated with superannuation balances over $3 million. This will be a tax paid by the individual based on the growth in their superannuation accounts over a year, in proportion to their total super balance of over $3 million.
For example, you will only be taxed at the 30% rate on the excess over $3 million – the $3 million will be taxed at 15%. You can pay this amount yourself, or release it from super to pay it.
However, this measure will not come into effect until the 2026 financial year.
Businesses will soon have to pay their employees super along with each pay run. If you pay your employees weekly, you will also have to pay their superannuation weekly. This will come into effect from 1 July 2026, so payroll systems can be altered and amended to suit the changes. If you need assistance with this process, feel free to consult with a professional advisor, like us.
The previous government introduced changes to what is known as Non-Arms Length Expenses (‘NALE’) of Self Managed Superannuation Funds. Where a fund underpays a related party for services or assets, then the fund is subject to 45% tax on either any earnings related to that expense or where you can’t relate an expense to any particular earnings, it is 45% tax on all the earnings of the Fund. The amendment will limit the tax on any non-arms length expense that doesn’t relate to any particular earnings to 45% at double the value of the expense.
With these changes to superannuation to take place over the next few years, it is important to discuss with a professional adviser any action you may need to take in preparation. Start a conversation today