Superannuation requirements are constantly evolving in Australia and the year 2023 is no different.
Take a look at some recent updates and find out whether they may impact you.
The superannuation guarantee is the law that obliges all employers to pay a minimum amount into every employee’s super fund.
As of 1 July 2023, the super guarantee will rise from 10.5% to 11%, with ongoing 0.5% annual increases until it reaches 12% in 2025.
Most financial software platforms have features that allow for the updated superannuation payment calculations without the need for intervention.
Xero has features that automatically update the statutory rate, as does QuickBooks, unless set otherwise. MYOB has a ‘set and forget’ feature as well. Ensure you check these for the first pay period following the increase
Employer impact: As an employer, you will be responsible for complying with these rises at the start of the next financial year. Talk to your accountant or bookkeeper to make sure the change is made and you have budgeted for the extra expense as it can add up, especially if you have a large team.
Before 1 July 2022, workers who earned less than $450 per month were not entitled to superannuation.
This threshold has been removed resulting in some 300,000 workers, many of them women now receiving superannuation payments.
Employer impact: If you have casual or part-time workers who earn less than $450 per month, confirm they have been receiving superannuation payments this financial year.
The downsizer rules that apply to superannuation in Australia allow home owners over a certain age to sell their home and make superannuation contributions of up to $300,000 for singles and $600,000 for couples.
The minimum age for downsizer contributors was lowered from 60 to 55 on 1 January 2023.
At the moment, superannuation contributions and investment earnings are taxed at 15%.
It has been announced that it is expected that from 1 July 2025 the tax concessions will reduce for individuals whose superannuation balance exceeds $3 million. These individuals will be taxed an additional 15% on any earnings on balances over $3 million.
This will not affect the vast majority of Australians who have far less than $3 million in their super and are not likely ever to exceed that number.
Whilst not yet law, there is a push for the introduction of payday super, and it is particularly pertinent to employers.
Most employers currently pay super quarterly for their employees, but the push is for super to be contributed at every pay cycle. This has the potential to reduce late or unpaid employer contributions. It will also mean employee super grows earlier in line with the pay cycles.
Employer impact: Whilst this is not yet policy employers should be aware that this change could be on the horizon. It will affect the way pay runs are made and mean you have to have super payments ready to go with every pay cycle.
From 1 July 2023 the general transfer balance cap will increase by $200,000 to $1,900,000 following an indexation adjustment.
The transfer balance cap has applied since 1 July 2017 and is a limit on the total amount of superannuation that can be transferred into a retirement phase pension, where there is no tax on earnings.
Depending on an individual’s own circumstances, their personal balance cap will be between $1.6 and $1.9 million.
AFS & Associates are your partners in providing peace of mind. Get in touch if you would like some more information about these changes.