Treasury has issued the exposure draft legislation for consultation to represent that the Government will impose a 30% tax on future super fund earnings where the total super balance of the member is over $3m.

30% Tax on Super Balances Above $3m

According to the treasury, there is a possibility that the Government will impose a 30% tax on the future super fund over $3m. As per the draft legislation, the government intends to:

  • Impose a tax on member accounts with super balances over $3m from 1 July 2025 (not indexed), and
  • Apply an extra 15% tax to ‘unrealised gains’. It will mean that tax liability will increase if the assets’ value increases.

Budget 2023-24

On Tuesday, 9 May 2023, the 2023-24 Federal Budget will be released. To date, there has been little information released about the upcoming Budget except for the tax imposed on super balances exceeding $3 million and the non-extension of the temporary $1,500 low and middle-income tax offset beyond June 30, 2023. The government is trying to balance easing the cost of living with avoiding an increase in inflation. During an election cycle, the mid-term Budgets are the opportune time for implementing any necessary austerity measures. The government will likely scrutinize the concessions provided within the tax system to ensure they meet their objectives and may also reconsider how they allocate their spending. Some areas that need full attention include:

  • The implementation of stage three tax cuts, which will merge the 32.5% and 37% tax brackets into a single rate of 30% for individuals with assessable income between $45,000 and $200,000, has been postponed until 1 July 2024. The government had promised to uphold these tax cuts during the election and can defer the issue until the 2024-25 Budget, but this remains to be seen.
  • Allocation of funds for announced defence spending.
  • Active support for the development of a viable clean energy industry and the transition to clean energy, as outlined in the joint submission from the Business Council of Australia, World Wide Fund for Nature-Australia, and Australian Council of Trade Unions, and the Australian Conservation Foundation.
  • The productivity measure known as “Temporary Full Expensing,” which encourages business investment by allowing the full cost of depreciable assets to be expensed in the first year of use, will expire on 30 June 2023. The government will decide whether to extend this measure, restructure the small business instant asset write-off, or remove the concession altogether.
  • Technology and training boost – In the 2022-23 Federal Budget, the former government made an announcement that it would provide business taxpayers with ‘bonus’ tax deductions when they invest in employee training. With the Skills and Training Boost, small businesses can claim 120% deductions for eligible expenses incurred on external training for employees between 29 March 2022 and 30 June 2024. The Technology Investment Boost helps with a 120% deduction for eligible expenditures incurred for improving digital operations. It can include depreciating assets’ costs. The intention is to provide a boost for expenses that arise from 29th March 2022 until 30th June 2023, which includes a maximum bonus deduction of $20,000. However, the laws allowing for these boosts are still awaiting approval from Parliament. The Budget presents a chance to expand the scope and conditions of this concession.