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Australia

Key takeaways from the 2024-25 Australian Federal Budget | Superannuation:

$3m

15% additional tax on the proportion of earnings attributable to superannuation balances greater than $3 million from 1 July 2025.

11.5%

Super Guarantee to increase as previously legislated from 11% to 11.5% from 1 July 2024.

12%

From 1 July 2025 the Superannuation Guarantee of 12% will be paid on Commonwealth government-funded Paid Parental Leave.

Reduction of superannuation concessions to proceed

From 1 July 2025, the Government will proceed with reducing the tax concessions available to individuals with a total superannuation balance exceeding $3 million.

The measures propose to apply an additional tax rate of 15% on the amount of earnings relating to the proportion of an individual’s total superannuation balance that exceeds $3 million. The formula calculates a deemed earnings amount which also includes notional (unrealised) gains and losses.

This was first announced by the Treasurer on 28 February 2023 and draft legislation was introduced into Parliament on 30 November 2023. Following referral of the proposed measures to the Senate Economics Legislation Committee, a Report was handed down on 10 May 2024, recommending the bills be passed with no changes.

The earnings on balances below $3 million will continue to be taxed at 15% or less under the existing rules.

You can read more about how the proposed rules work here.

Superannuation Guarantee set to continue to increase to 12%

The Superannuation Guarantee rate is scheduled to increase as previously legislated from the current 11% to 11.5% from 1 July 2024. Employers should review their existing systems and processes to ensure the increase is correctly reported and paid in the new financial year.

There will be a final 0.5% increase to the Superannuation Guarantee rate to 12% from 1 July 2025.

Payday superannuation to proceed

The Government has indicated that the proposed payday superannuation measures will proceed from 1 July 2026.

Payday superannuation was first announced by the Treasurer on 2 May 2023, requiring employers to pay an employee’s Superannuation Guarantee at the same time as their salary and wages. This measure is not yet law.

Funding will be provided as part of the Government’s Workplace Relations agenda, some of which will be used to support workplaces in implementing the introduction of payday superannuation.

Superannuation to be paid on Paid Parental Leave

From 1 July 2025, the Superannuation Guarantee of 12% will be paid on Commonwealth government-funded Paid Parental Leave. This measure aims to help normalise parental leave as a workplace entitlement and reduce its impact on the retirement incomes of eligible parents.

This measure is also in support of the proposed objective of superannuation, “to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”

Contributions caps to increase from 1 July 2024

From 1 July 2024, the general concessional contributions cap will increase due to indexation from the current $27,500 to $30,000 for all individuals, regardless of age.

The non-concessional contributions cap will also increase from the current $110,000 to $120,000 from 1 July 2024. For eligible individuals, the bring-forward cap may be available to a limit of up to $360,000.

Individuals should ensure they meet the required minimum standards, age requirements and tests before making superannuation contributions to avoid unnecessary taxes or penalties.

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