On the 9th May, Treasurer Jim Chalmers announced the 2023 Federal Budget. Stronger than expected revenues from taxation and resources delivered a surplus of $4 billion. The focus of the budget was on cost of living measures.

These measures will be paid for with increased taxes on super, multinational corporations, tobacco, immigrants and Australians travelling overseas. The Federal Government will also fund their announcements by collecting the petroleum rent tax sooner and by running budget deficits in the future.

The most notable budget announcements included;

Superannuation

As previously flagged, the government has announced their intention to levy a new tax on individuals who have superannuation balances in excess of $3 million. Starting in the 2025/26 financial year, there will be an additional 15% tax on super fund earnings relating to balances over $3 million.

From July 2026, the Government will also require employers to pay contributions into their employees’ super at the same time as salary and wages. This is expected to benefit employees with higher balances at retirement.

In response to industry lobbying, the Treasurer has announced changes to the non arms length expenses rules for self managed super funds. Under the amendments, the amount of income subject to the tax will be limited to twice the level of a general expense.

In regards to superannuation, it should also be noted that the government has not announced the extension of reduced minimum payments for retirement phase pensions. This means that those drawing such pensions from super will be required to take at least the full minimum payment during the 2023/24 year.

Taxation

As previously announced, the Government has elected to retain the already legislated stage 3 tax cuts due in the 2024/25 financial year. These cuts, will reduce the rate of tax on income between $45,000 and $200,000 pa to 30%.

For business, the instant asset write off has been extended for another year. However, it has been capped at $20,000.

Cost of Living

Included in the expenditure plans was the cheaper childcare package, which has already passed through parliament. Starting in July, this will provide relief for 1.2 million families by raising the Child Care Subsidy to 90% for families on a combined income of $80,000 or less. For families earning above this, the rate tapers down until it reaches 0% for families earning $530,000.

Financial support for single parents will also be extended by raising the cut-off age for the Parenting Payment. This benefit currently ceases when the youngest child turns 8, but this will be increased to 14.

The unemployed also get some relief, with JobSeeker payments to be increased by $40 per fortnight. This also applies to youth allowance and Austudy. The higher rate JobSeeker payment for long term unemployed will now kick in at age 55, instead of 60.

A sum of $3.5 billion has been allocated to increase access to bulk billing. This will provide 11.6 million eligible Australians, including children, pensioners and concession card holders, free access to GPs.

Dispensing rules will be changed for pharmacies, so people can obtain two months’ worth of medication on a single prescription. Currently the rules only allow for 30 days supply. The government hopes the change will reduce the visits to pharmacists and lower the cost of medicine.

Electricity price relief for low income households and small businesses was also a focus. Those on income support, and a million small businesses will be eligible for a subsidy of up to $500 and $650 for businesses towards their power bills.

Aged Care

In a bid to address staffing issues in the aged care sector, the government has committed $11.3 billion to fund a pay increased for care workers. This will fund the 15% pay increase that was subject to a recent Fair Work Commission ruling.

On the face of it, there appears to be little in this budget that will impact most people. The relief for cost of living will be welcomed by those that qualify and the confirmation of the new super tax for large balances will cause some to reassess their plans.

For further information on how these announcements may affect you, please call 1300 ELSTON or contact us to speak to one of our advisers.