2024–25 Federal Budget: Key Superannuation and Retirement Measures
On Tuesday 14 May 2024, Treasurer Jim Chalmers handed down the 2024–25 Federal Budget, his third Budget. The Budget included a number of significant superannuation, retirement and workplace-related measures that will affect employers, employees and retirees.
Outlined below are the major superannuation and retirement-related announcements.
Paying Super on Government-Funded Paid Parental Leave
The Budget confirmed the proposal to pay superannuation on Government-funded paid parental leave (PPL) for births and adoptions on or after 1 July 2025.
From that date, the superannuation guarantee (SG) rate will be 12%, increasing from 11.5% in the 2024–25 financial year. Eligible parents will receive an additional payment equal to 12% of their PPL payments, which will be contributed by the Government directly into their superannuation fund.
Payday Super and Unpaid Superannuation Measures
Payday Super Funding
While the Budget did not provide further detail on the proposal to require employers to pay superannuation guarantee contributions at the same time as salary and wages from 1 July 2026, it did include funding to support this policy direction.
The Government will provide $111.8 million over four years from 2024–25, with $12.4 million per year ongoing, to progress its workplace relations agenda. This includes funding for Payday Super initiatives.
Of this amount, $60 million will be provided over four years to increase the Productivity, Education and Training Fund. This funding will support practical activities by employer and worker representatives to improve workplace productivity and implement policy changes such as Payday Super.
Unpaid Super in Bankruptcy and Liquidations
The Government intends to recalibrate the Fair Entitlements Guarantee Recovery Program from 1 July 2024 to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy.
This measure is expected to deliver efficiencies of $13 million over four years from 2024–25 and $29.9 million over the medium term. It is projected to increase tax receipts by $63.1 million over four years and $114.4 million over the medium term, with $44.4 million over four years expected to be paid to superannuation funds.
Fair Work Compliance and Small Business Support
Non-Compliance by Large Corporates
The Budget allocates $27.5 million over four years from 2024–25, with $7 million per year ongoing, to enable the Office of the Fair Work Ombudsman to continue targeting non-compliance with the Fair Work Act 2009 by large corporate employers.
Support for Small Business Employers
An additional $20.5 million over four years from 2024–25, with $5.1 million per year ongoing, will be provided to support small business employers in complying with recent workplace law changes. This funding will also be directed to the Office of the Fair Work Ombudsman.
National Labour Hire Regulation Model
The Government will provide $2 million in 2024–25 to the Victorian Government to establish a project office and progress a national labour hire regulation model. This initiative aims to harmonise labour hire regulation across states and territories.
The cost will be partially offset by $1.2 million from not proceeding with the 2019–20 Federal Budget measure for a National Labour Hire Registration Scheme.
Super Account Balances Above $3 Million: Public Sector Schemes
The Budget did not include further detail on the Government’s proposal to apply an additional 15% tax on superannuation earnings, including unrealised capital gains, attributable to the portion of an individual’s super balance exceeding $3 million from 1 July 2025. This proposal forms part of the proposed Division 296 of the ITAA 1997, which is currently before the House of Representatives.
However, the Government announced it will provide $9.2 million over the forward estimates, with $1.1 million per year ongoing, to the Commonwealth Superannuation Corporation and the Department of Finance. This funding is intended to support implementation of the measure for members of the Commonwealth defined benefit superannuation scheme.
Social Security Deeming Rates Frozen
The Government confirmed that social security deeming rates will remain frozen at their current levels for a further 12 months, until 30 June 2025, to assist with cost-of-living pressures.
The deeming rates remain at 0.25% below the threshold and 2.25% above the threshold. While the rates are frozen, the thresholds continue to be indexed. From 1 July 2023, the thresholds are $60,400 for single pensioners and $100,200 for pensioner couples.
Social Security Means Test and Military Invalidity Payments
The Government will implement a social security means test treatment for military invalidity payments affected by the Full Federal Court decision in FCT v Douglas (2020).
The Douglas case concerned the taxation of lump sum payments and invalidity pensions paid under the Defence Force Retirement and Death Benefits Act 1973 and the Military Superannuation and Benefits Act 1991.
The Government stated that the proposed means test treatment will ensure that the Douglas decision does not affect income support payment rates for veterans receiving invalidity payments under these schemes, compared with the arrangements that applied prior to the decision.
Get Advice on Budget 2024 Superannuation and Tax Changes
The 2024–25 Federal Budget includes a range of measures that may affect your superannuation, tax position or workplace obligations. Given the complexity and ongoing development of some proposals, seeking professional advice can help you understand how these changes apply to your circumstances and ensure you are well prepared.
Speak to one of our accountants if you have any questions about the changes in tax for 2024.
