Federal Budget 2023 – What it means for (some) individuals

Chris Forrest- Senior Partner and Principal Adviser

Sovereign Wealth Partners

The budget headline was dominated by a projected surplus of $4 billion thanks to record low unemployment and higher than expected commodity revenue despite a net increase in spending.

Digging a little deeper we find, for individuals, there was almost no new news.

Please note- ALL the proposals below require passage through legislation before they can be implemented.

Superannuation

The proposal of a $3million balance cap on superannuation has already been announced. This cap includes all superannuation and pension funds for an individual. Earnings on the balance above this amount will be taxed at an increased rate of 30% (including unrealised gains), being an additional 15% on top of the existing 15% tax in super.

The additional tax on earnings imposed by this measure will impact around 80,000 individuals in 2025–26, or approximately 0.5 per cent of individuals with a superannuation account. The measure will not place a limit on the amount of money an individual can hold in superannuation. The current contributions rules would continue to apply.

Whilst the detail of this measure is yet to be finalised, at this point there is still no proposal to index the cap to inflation. This means that over time the value of the cap will fall in real terms and impact more and more Australians.

From 1 July 2026, employers will be required to pay Superannuation Guarantee (SG) entitlements on the same day they pay salary and wages.

Income tax rates

Despite speculation to the contrary, there was no change to the Stage 3 tax cuts legislated by the previous government to combat bracket creep.

Taxable Income Current Tax Rates until 30 June 2024Up to $18,2000$18,201 – $45,00019%$45,000 – $120,00032.5%$120,001 – $180,00037%From $180,00145%

Taxable Income Tax Rates from 1 July 2024Up to $18,2000$18,201 – $45,00019%$45,000 – $120,00032.5%$120,001 – $180,00037%From $180,00145%

Medicare

The Medicare levy low-income threshold will increase for singles and families to account for inflation.