The federal government announced two significant measures regarding superannuation as part of the 2023-24 Federal Budget. Whilst these measures will not come into effect for several years, it is important to be aware to avoid any penalties once the measures commence.

From 1 July 2026, employers will be obligated to pay their employees’ superannuation guarantee entitlements on the same day as their salary and wage payments. Currently, employers are only required to make these payments on a quarterly basis. This measure seeks to increase the frequency of superannuation payments to match that of salary and wages.

The goal is to provide employees with greater transparency regarding their entitlements and help the ATO recover unpaid superannuation. Additionally, changes to the superannuation guarantee charge will be required to maintain alignment with the new payment frequency. This change will be particularly beneficial for those in lower-paid, casual, or insecure work, who are more likely to miss out on their superannuation guarantee when payments are less frequent.

The government also announced further information on their proposal to increase tax on superannuation accounts with balances over $3 million.

From 1 July 2025, earnings corresponding to the proportion of an individual’s total superannuation balance exceeding $3 million will have a higher tax rate of 30%, up from the previous 15%. However, this rate is still lower than the top marginal tax rate of 45%. Any earnings below the $3 million threshold will continue to be taxed at a rate of 15% for those in the “Accumulation Phase” and 0% for those in the “Pension Phase”.

This measure will also appropriately value interests in defined benefit schemes and impose similar taxation on them. It is important to note that there will be no limit on the amount of money an individual can hold in superannuation, and the current contribution rules will remain unchanged.