What's changing for Super in 2023?

 

Following the 22-23 October Federal Budget release, several changes to the super system were announced, which are scheduled to be implemented this year.

Eligibility criteria for downsizer contributions has been broadened

The downsizer contribution rule allows people to make a one-off post-tax contribution of up to $300,000 per person to their super from the proceeds of the sale of their home. Couples can make contributions of up to $600,000.

Downsizer contribution changes:

  • The minimum eligibility age was reduced to 55 years from 60 years.

  • The increase of income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles, and from $98,054 to $144,000 (combined) for couples

  • Extended the exemption from pension asset testing of the proceeds of sale of the principal home from 12 months to 24 months


Increased Super Guarantee Rate

The Super Guarantee (SG) Rate is the minimum amount of super your employee is legally required to pay into your super account. From 1 July 2022, the SG rate was set at 10.5% of a person’s ordinary earnings. Over the coming years, the minimum SG rate will increase as follows.

SG Rate scheduled increases:

  • 1 July 2023 – 11.00%

  • 1 July 2024 – 11.50%

  • 1 July 2025 – 12.00% 


Updates to key super rates and thresholds

A Range of indexed super rates and thresholds will change in line with updates made to the Average Weekly Ordinary Time Earnings (AWOTE), including:

[1] Government Co-contributions

If a person earns under $42,016 in the FY2022/23, the government automatically adds 50c for every dollar you pay into your super after tax, up to a maximum $500 co-contribution

  • Lower income threshold - $42,016

  • Higher income threshold - $57,016

[2] Maximum Super Contribution base'

The maximum super contribution base is used to determine the maximum limit on any individual employee's earnings base for each quarter of any financial year. Employers do not have to provide the minimum support for the part of earnings above this limit.

  • Income per quarter currently set at $60,220 for FY2022/23

[3]LOW-RATE CAP AMOUNT

The limit set on the amount of taxable components (both taxed and untaxed elements) of a super lump sum that can receive a lower (or nil) rate of tax. It applied to members that have reached their preservation age but are below 60 years.

  • Currently threshold cap set at $230,000 for FY2022/23

[4] transfer balance cap

From 1 July 2023, the general transfer balance cap is set to increase from $1.7 million to $1.9 million.

If you’d like to discuss any of the above content further and how it may apply to you, please contact your financial adviser via info@ultimumfinancial.com

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Education UpdatesLuke Watson