The SMSF Association provided a federal budget update to all of their members outlining 7 key areas which might impact your Self Managed Superfund. Below is a summation of the report which you can quickly read to keep yourself up to date.
Superannuation Concessions: Effective from 1 July 2025, the tax concessions for individuals with a total super balance over $3 million will be reduced, lifting the tax rate to 30% from 15% for earnings exceeding this threshold. The SMSF Association is requesting further consultation to better understand the impact on small businesses and individuals.
Non-arm’s length income (NALI): Changes proposed to the NALI provisions will limit the taxable income of small super funds, exempting large APRA regulated funds from NALI provisions. The SMSF Association is advocating for a practical solution to address disproportionate outcomes and reduce the onerous compliance burden on super funds.
Superannuation Guarantee Frequency: From 1 July 2026, employers will need to pay their employees’ Superannuation Guarantee entitlements on the same day as salary and wages, instead of quarterly. This measure will enhance the visibility of superannuation payments, support better retirement outcomes, and help the ATO recover unpaid superannuation.
Franking Credits and Capital Raisings: The start date of the 'Tax integrity – franked distributions funded by capital raisings' measure has been shifted to 15 September 2022. The SMSF Association supports efforts to prevent tax avoidance but expresses concern that the amendments may inadvertently affect normal business practices.
General Anti-avoidance Expansion: The Government will expand the general anti-avoidance rule to apply to schemes achieving an Australian income tax benefit, even if the dominant purpose was to reduce foreign income tax, from 1 July 2024. The SMSF Association calls for more details due to potential complexities for those transferring foreign pension funds into their Australian super fund.
Fighting Scams: The Government will invest $86.5 million over 4 years to combat scams and online fraud, including the establishment of the National Anti-Scam Centre. The SMSF Association supports these measures, but notes the ATO's absence in the initiative.
Additional Resourcing: $1.9 million has been allocated for the creation of a public registry of beneficial ownership of companies and trusts over two years from 2023-24. The SMSF Association seeks further details on potential impacts on SMSFs.
In summary, while the budget introduces measures that aim to improve the fairness and integrity of the superannuation system, the SMSF Association calls for further consultation and clarity on several points, particularly concerning the proposed $3 million super tax threshold, NALI provisions, and the general anti-avoidance rule expansion.