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Home News Federal Budget updates and the changes coming to super on 1 July 2023

Between the Federal Budget and the rapidly-approaching new financial year, this time of year always signals things to talk about when it comes to super.

While this year’s Budget, delivered on 9 May 2023, was relatively light on changes to super, there were a couple of proposed measures to take note of. There are also a number of previously-announced changes taking effect on 1 July 2023.

Here’s your handy guide to what you need to know:

Budget measures

Reduced tax concessions above the $3 million balance threshold

The Government has proposed that, from 1 July 2025, tax concessions for individuals with a total superannuation balance  (TSB) above $3 million will be reduced.

This will take the form of a tax of 15 percent on the proportion of earnings corresponding to balances above $3 million. As earnings on super accounts are already taxed at 15 percent, this means that earnings on balances above $3 million will generally attract a combined rate of 30 percent.

The Government has proposed that members will have the choice to pay the tax out of pocket, or from their super account.

The calculation method

a) The formula that will be used for calculating earnings in a financial year is:

Earnings = TSB in current financial year – TSB in previous financial year + withdrawals – net contributions

b) The proportion of earnings corresponding to funds above $3 million will be calculated as:

Proportion of earnings = (TSB in current financial year – $3 million) / TSB in current financial year

c) The tax liability will be calculated as:

Tax liability = 15 percent x earnings x proportion of earnings

Payment of super on payday

Currently, employers are obligated to pay Superannuation Guarantee contributions for their staff once a quarter. The Government has proposed that, from 1 July 2026, employers will be required to pay contributions on the same day that they pay salary and wages.

This measure aims to help stop workers missing out on unpaid super, with some estimates finding that 2.9 million employees missed out on $5 billion in employer super contributions in 2018-19.

Receiving contributions more often, instead of once a quarter, could also help employees make the most of their super – the longer each dollar sits in your super account, the more time compound interest has to work.

What else is changing on 1 July 2023

The minimum drawdown for pensions is set to revert back to pre-Covid amounts

Australians with an income account must draw down (or withdraw) a minimum amount each financial year. This amount is a percentage of a member’s account balance each 1 July, with the percentage dependent on their age.

The Australian Government reduced the minimum amounts that retired members must draw down from their income accounts by 50 per cent for the 2019/20, 2020/21, 2021/22, and 2022/23 financial years.

This was a temporary measure that aimed to help retired members manage the impact of volatility in global financial markets, by reducing their need to sell investment assets to fund the drawdown requirements.

The Government has confirmed that this temporary measure will end in the current financial year. This means that the minimum drawdown rates are changing on 1 July.

What do I need to do

If you have an existing income account, you don’t need to do anything. If the amount you currently draw down from your account is less than the minimum rate as at 1 July, we’ll be adjusting your payments to ensure it’s in line with the new minimum.

If you’re planning to open an income account before the end of the current financial year, you can book a one-on-one appointment with a Super Adviser, who can help you figure out the best way to set up your account.

You can also change the amount and frequency of your income payments at any time by logging into your account and heading to the ‘withdrawals’ section. Just remember, the annual withdrawal amount you set needs to be at or above the minimum drawdown rate for your age.

The minimum drawdown rates
AgeTemporary ratesRates from 1 July 2023
Under 652%4%
65 - 742.5%5%
75 - 793%6%
80 - 843.5%7%
85 - 894.5%9%
90 - 945.5%11%
95 and above7%14%
The Superannuation Guarantee percentage is increasing again

The Superannuation Guarantee (SG) will increase by 0.5 percent for the third 1 July in a row to hit 11 percent on 1 July 2023.

The SG – the money that your employer must contribute to your super on your behalf – will continue to increase by 0.5 percent each 1 July until it reaches 12 percent on 1 July 2025.

The increase is designed to ensure that our super balances keep up with the cost of living by the time current employees reach retirement, so they can enjoy a comfortable retirement.

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