Jun 4, 2024

Federal Budget 2024: Super related measures

On Tuesday 14 May 2024, Treasurer Jim Chalmers handed down the 2024-25 Federal Budget, his 3rd Budget. The major superannuation and retirement-related measures announced in the Budget include the following;

Paying super on government PPL confirmed;
The Budget confirmed the proposal to pay superannuation on Government-funded paid parental leave (PPL) for births and adoptions on or after 1 July 20 25. From that time, the super guarantee (SG) rate will be 12% (up from 11.5% for 2024-25). Therefore, eligible parents will receive an additional payment (12% of their PPL payments) as a contribution by the Government to their superannuation fund.

Payday super: funding to improve unpaid super in bankruptcy;
While the Budget papers did not reveal any further details on the Government’s proposal to require all employers to pay their employees’ super guarantee (SG) at the same time as their salary and wages from 1 July 2026. It did reveal that the Government will provide $111.8m over 4 years from 2024-25 (and $12.4m per year ongoing) to progress its workplace relations agenda, including: Payday super: $60m will be provided over 4 years from 2024-25 to increase the Productivity, Education and Training Fund to support practical activities by employer and worker representatives to boost workplace productivity and engage in tripartite cooperation. The Government said this will also support workplaces to implement policy changes, such as Payday Super.

Unpaid super in bankruptcy and liquidations: the Government intends to recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024. This is expected to achieve efficiencies of $13m over 4 years from 2024-25 (and $29.9m over the medium term) through an expected increase in tax receipts of $63.1m over 4 years from 2024-25 (and $114.4m over the medium term), with $44.4 million over 4 years from 2024-25 (and $96.9m over the medium term) expected to be paid to superannuation funds.

Fair Work non-compliance by large corporates:- $27.5m over 4 years from 2024-25 (and $7m per year ongoing) will be provided to enable the Office of the Fair Work Ombudsman to continue targeting non-compliance with the Fair Work Act 2009 by large corporate employers.

Small business support for workplace law changes: $20.5m over 4 years from 2024-25 (and $5.1m per year ongoing) will be provided to boost funding for the Office of the Fair Work Ombudsman to support small business employers to comply with recent changes to workplace laws.

National labour hire regulation model: $2m in 2024-25 will be provided for the Victorian Government to establish a project office and progress a national labour hire regulation model through harmonisation of state and territory laws. Costs will be partially offset by $1.2m by not proceeding with the 2019-20 Federal Budget measure for a National Labour Hire Registration Scheme to protect vulnerable workers.


Super account balances above $3m: public sector schemes
The Budget papers did not reveal any further details on the Government’s proposal to apply an additional 15% tax on superannuation “earnings” (including unrealised capital gains) corresponding to the percentage of an individual’s super balance that exceeds $3m for an income year commencing from 1 July 2025: proposed Div 296 of the ITAA 1997 (the Bill is currently before the House of Representatives). However, the Government said it would provide $9.2m over the forward estimates (and $1.1m per year ongoing) to the Commonwealth Superannuation Corporation and the Department of Finance to implement the measure for members of the Commonwealth defined benefit superannuation scheme.

Social security deeming rates frozen for a further 12 months;
The Government announced that it will extend the freezing of the social security deeming rates at their current levels for a further 12 months until 30 June 2025 to help with cost-of-living pressures. While the deeming rates were frozen at 0.25% (below the threshold) and 2.25% (above the threshold), the applicable thresholds are still indexed. Since 1 July 2023, the threshold amount for financial investments is $60,400 (for single pensioners) and $100,200 (for pensioner couples).

Social security means test treatment: military invalidity payments
The Government will implement a social security means test treatment for the military invalidity payments affected by the Full Federal Court’s decision in FCT v Douglas (2020) 112 ATR 602; [2020] FCAFC 220. That case concerned the taxation of a lump sum payment paid to a former ADF member in arrears of invalidity benefits under the Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act) and the taxation of invalidity pensions under the Military Superannuation and Benefits Act 1991 (MSB Act). The Government said its proposed social security means test treatment will ensure that the Douglas decision does not affect income support payment rates for veterans who receive an invalidity payment from the MSB Scheme and the DFRDB Scheme, compared to the pre-Douglas arrangements.

Speak to one of our accountants if you have any questions about the changes in tax for 2024.