Following the announcement of the latest Federal Budget, please find below a summary of items that may affect you and your financial position. Surprisingly, and for a pleasant change, this years' budget included relatively few measures impacting superannuation.

Superannuation

Superannuation Guarantee – Changes to payment frequency

Currently employers are required to pay superannuation contributions on a quarterly basis; however, from 1 July 2026 employers will be required to pay their employees’ super at the same time they pay their salary and wages.

This in turn, will give employees greater visibility over whether their entitlements have been paid full and on time, and will better support retirement outcomes as more frequent payment and investment into the employees’ superannuation fund provides the opportunity to generate compound returns.

The Government will invest in improving their data-matching capabilities to pro-actively identify instances of under or unpaid super in near-real time, and enhance unpaid super recovery.

A welcome measure for the benefit of employees.

Superannuation Guarantee Percentage Increase

Although not altered by the current Budget, the previously announced increase in the Superannuation Guarantee percentage from the current 10.5% to 11.0% commences on 1 July 2023.

Reducing superannuation tax concessions for balance above $3 million.

As expected, the Government will go ahead with its previously announced measure to reduce tax concessions available to individuals with a total super balance exceeding $3 million. Initially, this is expected to affect around 80,000 people from 1 July 2025.

The Government intends to give effect to this measure by increasing the tax rate applicable to earnings on the proportion of a members’ superannuation benefit above $3 million from 15% to 30%.

Earnings on balances below $3 million will continue to be taxed at 15% for the amount held in accumulation phase or 0% if held in a retirement income stream.

Defined benefit interests will be appropriately valued and have earnings taxed similarly to ensure commensurate treatment.

We await draft legislation to explain how the measure will work.

Social Security Measures

A significant focus this year was on reducing cost-of-living pressures and reducing financial hardship experienced by low income Australians, with a particular focus on women’s economic opportunity.

Cost-of-living Relief

To aid in alleviating cost-of-living pressures, the Federal Government in partnership with the State and Territory Governments will provide up to $500 in electricity bill relief for eligible households (in receipt of Age Pension, Family Tax Benefit Part A and B or Commonwealth Seniors Health Card holders) and $650 to small businesses.

The Government will also put in place measures to limit price increases on electricity and gas via a temporary cap on the price of gas, and on the price of coal used in electricity generation.

Reducing out-of-pocket health costs

To reduce out-of-pocket health care costs, the Government will triple the bulk billing incentive to support GPs to bulk bill for common consultations with children under age 16, pensioners and Commonwealth concession card holders. A higher bulk billing incentive also applies in rural areas to support viability of general practices in rural communities.

Reducing the cost of medicines

From 1 September 2023, some patients with stable chronic conditions will be able to get 2 months’ worth of medicine, cutting pharmacy and GP visits in half and reducing out-of-pocket costs. This is particularly significant for patients in rural and remote communities travelling significant distances to have repeat scripts filled.

Expanding access to Parenting Payment (single)

From September, single parents will continue receiving Parenting Payment (single) until their youngest child turns 14 (currently up to 8 years old) ensuring they continue to receive a higher rate of payment compared to the JobSeeker Payment base rate.

Parenting Payment recipients also benefit from a more generous income test than JobSeeker recipients, allowing single parents more opportunity to re-enter the workforce without financial penalty.

The measure will help alleviate the higher rates of financial hardship and barriers to employment experienced by single parents, 91% being women.

Increasing Income Support Payments

The Government is increasing the base rate of JobSeeker, Austudy and Youth Allowance by $40 per fortnight. Based on current payment rates, this represents around 7% indexation based on the base Austudy or Living Away from Home rate of Youth Allowance, and around a 5.7% increase for JobSeeker recipients.

The existing higher rate of JobSeeker payment provided to recipients aged 60 and above who have been in receipt of JobSeeker for 9 months or more will be extended to those aged 55 and above (the majority are women), increasing their base payment by $92.10 per fortnight. This brings the higher rate of JobSeeker up to around 80% of the Age Pension payment rate.

Increasing the rate of Rent Assistance

Low income households who rent will receive an increase to the rate of Rent Assistance. Eligible households include those in receipt of an income support payment (JobSeeker, Age Pension, etc) or receive more than the base rate of Family Tax Benefit Part A and pay rent above the rent threshold.

Housing Affordability

The Government will continue its support for a range of housing affordability measures, through the National Housing Accord which aims to build one million new homes from 2024 onwards.

Some of the measures include:

· Encouraging build-to-rent developments by accelerating tax deductions and reducing managed investment trust withholding tax rate;

· Supporting lending to community housing providers for social and affordable housing projects;

· Expanding the eligibility criteria of the Home Guarantee Scheme to any two eligible borrowers (beyond defacto and married couples). The scheme allows eligible borrowers to purchase a home with as little as 2%-5% deposit without paying Lenders Mortgage Insurance.

Aged Care & NDIS

The Government is seeking to improve working conditions and payment rates for Aged Care workers; and to provide improved support for older Australians.

A 15% increase to award wages for Aged Care workers.

Provision of an additional 9,500 home care packages to support older Australians who wish to remain living independently at home for longer.

Significant funding to develop and implement a new Aged Care Act to support sector reform, enhance the Star Rating system and improve food and nutrition in Aged Care.

The Government will also make a significant investment to improve disability systems and services, including development of a National Autism Strategy targeting early intervention for infants showing signs of autism, and improve capability and systems of the NDIS.

 If you wish to learn more please give us a call or book a time to visit us at our Adelaide Based Offices.