Pittwater Life April 2023 Issue

Business Life: Money
with Brian Hrnjak
Business Life
New Super tax: where does
the Government’s net widen?
This month we take a
look at the Federal
Government’s recently
announced changes to superannuation
taxation… at first
glance you might think these
the changes may never apply
to you but there are few situations
that could materially
widen the net of those affected.
Firstly, what has been
proposed: a change to the
taxation of superannuation
balances will come in from
1 July 2025, imposing an additional
tax of 15% on those
individuals with a total superannuation
balance (TSB) over
$3 million measured at the
end of 30 June 2026.
So, it’s not really a tax
rate of 30% as some have
described it or a doubling of
superannuation taxes; rather,
it is an additional tax on that
portion of your member balance
above a threshold much
like Division 293 tax that
applies to the contributions
of those on adjusted taxable
incomes over $250,000.
There is no mention of retrospectivity,
thank goodness
for that. Individuals subject
to the tax will likely have the
option of paying the tax themselves
or releasing the amount
from super, again, like Division
293 taxes. The changes
will also apply to defined
benefit funds, but how that is
going to work will need to be
subject to a fair amount of industry
consultation as defined
benefit members don’t usually
have TSBs.
The most contentious element
(so far) of this new tax
is how they intend to calculate
what is to be taxed. In regular
situations, if a person has
property or shares and they
earn rent or dividends or perhaps
they sell their property
or some shares, those items
are generally the factors we
include in the calculation of
taxation liability.
This new tax changes that
process quite dramatically.
When I was introducing the tax
change earlier, I used the term
‘total superannuation balance’
or TSB. The only people that
56 APRIL 2023
The Local Voice Since 1991