Sean Fannin, GBST’s Technical Legislation Consultant reviews the latest legislation that could affect wealth management administration platforms.
Generally, the income of a superannuation fund attributable to fund members in the accumulation phase are included in the fund’s assessable income, and the resulting taxable income is taxed at 15%.
On 28 February 2023, the Prime Minister of the Commonwealth of Australia, the Hon. Anthony Albanese MP, and the Commonwealth Treasurer, the Hon. Dr Jim Chalmers MP announced the following changes to the taxation arrangements of superannuation.
The earnings on Total Superannuation Balances above $3 million will have a concessional tax rate of 30% rather than 15%. Amounts under $3 million will continue to be taxed at 15%, however, it is not intended to have the $3 million threshold indexed.
Further, it is proposed that earnings would include unrealised capital gains and losses, and negative earnings can be carried forward and offset against the tax in future financial years.
Individuals can pay the proposed tax personally or elect to have the tax paid from their superannuation, including nominating the specific superannuation fund where they have multiple superannuation accounts.
The Treasury fact sheet outlines that proposed tax and reporting requirements are to be based on existing reporting requirements. It also proposed that individuals be notified by the Australian Taxation Office of their tax liability, with the first notices expected to be issued in the 2026/27 financial year.
The Government will undertake targeted consultation on the implementation of the measure before the 2023/24 Commonwealth Budget, to be delivered on Tuesday, 2 May 2023.
This is a Government announcement and is subject to change. Further, the proposal must be passed by Parliament before it can be implemented.
GBST will continue to monitor the progress of this measure.
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Posted in: Legislation, Superannuation, Wealth Management Administration
