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19th May, 2025
The way superannuation is paid may be about to undergo a significant transformation. The Labor government’s proposed “payday super” reforms would require employers to pay employees’ superannuation contributions within seven calendar days of every payday. Draft laws have been released for comment, and payday super is intended to apply from 1 July 2026, it’s important to understand what this could mean for you.
According to the ATO, while most employers do the right thing by their employees, an estimated $5.2 billion in super went unpaid in 2021–2022. The change to payday super is designed to improve the management of super payments and simplify payroll arrangements, reduce unpaid super incidents, and ultimately enhance retirement savings for Australians.
For employers, transitioning to payday super represents a shift in administrative processes. Some key considerations:
For employees, payday super offers several potential benefits:
The draft legislation was open for public comment until 11 April 2025, with introduction of final legislation dependent on the 3 May 2025 federal election outcome.
17th Jan, 2025
As retirement approaches, couples often discover a significant imbalance in their superannuation accounts. This disparity can become crucial when planning for retirement, and addressing it proactively can be beneficial for various retirement strategies.
Your individual total super balance as of 30 June each year impacts your ability to implement various super strategies in the following financial year. Key strategies where your total superannuation balance (TSB) is a condition of eligibility include:
When planning for retirement, the Age Pension is a consideration for many. The asset test only includes superannuation for individuals of pension age. If there’s a significant age difference between spouses, directing more super to the younger spouse could potentially maximise Age Pension entitlement at retirement.
Spouse contribution splitting allows you to transfer up to 85% of your annual concessional contributions to your spouse’s super account.
Key points:
Check if your fund offers spouse contribution splitting, as it’s not mandatory for all funds.
Apply for contribution splitting after the end of the financial year in which the contribution was made. If you roll over or withdraw your entire super balance before the financial year’s end, you can apply to split the contributions within that same year.
Spouse contribution splitting can help couples equalise their superannuation balances and optimise retirement outcomes. Consider your unique circumstances and seek professional advice to ensure this approach aligns with your long-term financial goals.
13th Sep, 2024
You may have heard that the annual cap on non-concessional contributions (NCCs) has increased for 2024–2025. This is great news for superannuation members who want to maximise their retirement savings.
NCCs are your own after-tax contributions, meaning they’re distinct and separate from concessional contributions such as compulsory employer contributions made for you, additional salary sacrifice contributions, and personal contributions you’ve made for which you claim a deduction. From 1 July 2024, the annual cap on NCCs increased from $110,000 to $120,000 due to indexation. This increase means that the maximum amount that can be contributed under a “bring-forward” arrangement has also increased. A “bring-forward” arrangement allows eligible members to contribute up to three years’ worth of NCCs in a shorter timeframe. This may be an attractive contribution strategy for those with an inheritance, a large bonus payment, or proceeds from the sale of an investment.
If you already commenced a bring-forward arrangement in the last year or two, you won’t get the benefit of the increased NCC cap for that arrangement. However, if you’ve been thinking about commencing one of these strategies, now is great time to consider this further.
You must be aged under 75 at some point in the financial year when you commence a bring-forward arrangement, and your total superannuation balance (TSB) as at 30 June of the previous financial year affects your eligibility.
Be aware that the TSB eligibility limits have changed since last year – and they’ve decreased. So, while the NCC cap and the maximum bring-forward cap have increased, the cut-off points when your eligibility reduces or ceases are lower. Be careful about referring to older advice or information (eg online) that is based on the TSB thresholds for 2023–2024.
13th Aug, 2024
The new financial year has begun, and with it have come some important changes to superannuation from 1 July 2024. With these changes coming into effect, it’s a good time to give your super a check-up. Your super could be one of the biggest assets you ever have, so getting into the habit of checking in regularly can help you stay on top of it and make better choices for your future.
On 1 July 2024, the superannuation guarantee rate increased from 11% to 11.5%. Employer super contributions are calculated on a worker’s ordinary time earnings, for payments of salary and wages. For employers, the maximum super contribution base increased from $65,070 to $62,270 (the limit on what you can earn each quarter before your employer can stop making super guarantee contributions). The concessional super contributions cap also increased from $27,500 to $30,000 and the non-concessional contributions cap increased from $110,000 to $120,000.
The ATO suggests the following steps as a good place to start in giving your super a check-up:
Check your contact details: Make sure your contact details and tax file number (TFN) are up to date with the ATO and your super fund.
Check your super balance and employer contributions: Checking your super balance and keeping track of your employer contributions can be done at any time through ATO online services or your super fund. Your employer should be paying your super at least every three months.
Check for lost and unclaimed super: If you’ve changed your name, address or your job, you may have lost track of some of your super. Lost super is where your super fund hasn’t been able to contact you, or your account is inactive. Unclaimed super is where your fund has transferred lost super to the ATO.
Check if you have multiple super accounts and consider consolidating: If you’ve ever moved jobs, you might have more than one super account. Each account will charge fees and may include insurance, so combining your super accounts may reduce fees, help you pay only for the insurance you need and make your super easier to manage.
Check your nominated beneficiary: Make sure you have a valid death beneficiary nomination with your super fund, as this isn’t covered by your will. Check with your fund if there is an expiry on the nomination – some funds have options where the nominations don’t expire, while most nominations expire every three years. If you don’t have a beneficiary nominated, your fund will follow the law in determining where your super should go. You should also take a careful look at how your fund is performing and check that you aren’t paying too much in fees. You might also think about evaluating how your super is being invested – does it match your stage in life, how much risk you are willing to bear, or even your ethics and values? If you have insurance cover with your super fund, regularly check that it still meets your needs.
The Association of Superannuation Funds of Australia (ASFA) has developed a “retirement standard” which provides a broad approximation of how much super you need in retirement. As of March 2024, as combined amounts for couples retiring at age 67, ASFA suggests:
$690,000 for a comfortable retirement (providing an income of $72,663 per year); and $100,000 for a modest retirement (providing an income of $47,387 per year).
These figures assume that you will draw down all your super, receive a part Age Pension, own your home outright and are in good health. While useful as a baseline, your personal needs may differ significantly.
Many people assume that they will just fall back on the Age Pension if there is not enough in their super. This is definitely a safety net; however, you may not be comfortable on the restrictive budget required to get by on the Age Pension. As at 1 July 2024, Age Pension for a couple is $43,752 per year.
For the most accurate assessment of your superannuation needs, it’s best to seek professional advice. Your adviser can consider factors such as your health and life expectancy, inflation and investment returns, wages growth and taxation, and fees and regular contributions. Professional advisers have access to sophisticated tools and can provide customised forecasts based on your unique situation.
13th Aug, 2024
If you manage a self-managed superannuation fund (SMSF), recent changes to tax rules for certain fund expenses could affect you. These changes may even apply to services provided for free. If your fund doesn’t pay market price for services, it could face significant extra tax.
The new rules focus on “non-arm’s length general expenses” – services provided to your SMSF at below-market prices or for free. Income related to these general expenses may be classified as “non-arm’s length income” (NALI) and taxed at 45%. The new rules took effect on 29 June 2024, but are retroactive to 1 July 2018.
Key points to consider
General expenses: The rules apply to general expenses not charged at market price. These are expenses that don’t relate to a specific fund asset, such as accounting fees or investment advice that does not relate to a specific investment (eg asset allocation advice).
Trustee roles: As a trustee, under the superannuation law you generally can’t charge for your duties. However, if you provide services for free, or at a significant discount, as a professional (eg accountant, auditor or financial adviser) the NALI rules may apply.
NALI limits: The amount of NALI is capped at twice the difference between the actual expense and the market rate. If no expense is incurred, it’s limited to twice the market rate.
Overall cap: The non-arm’s length component can’t exceed the SMSF’s taxable income (minus assessable contributions plus related deductions).
These new rules could catch out professionals trying to save their SMSF some money. If you’re providing services to your SMSF or getting services at below-market rates, you need to be aware of these rules.
If you’re unsure about how these rules affect your SMSF, it’s best to consult with a tax adviser. They can help you understand if your fund’s expenses are subject to the new rules and advise on any necessary changes.
25th Mar, 2024
The transfer balance cap which limits the amount of capital that can be transferred into a tax-exempt retirement phase will not increase for the 2024–2025 income year, based on the release of December 2023 consumer price index (CPI) numbers from the Australian Bureau of Statistics (ABS). This means the figure will remain at $1.9 million for the 2023–2024 and 2024–2025 income years.
The transfer balance cap was originally introduced in 2017 as a way to limit the amount of capital that can be transferred into a tax-exempt retirement phase.
This was implemented in response to criticism that the superannuation system was being used by the wealthy for estate planning purposes rather than for retirement, and that the soaring cost of tax concessions for fund members threatened the sustainability of the entire super system.
The transfer balance cap was originally set at $1.6 million, and indexation has applied to that cap from 1 July 2021 in line with the CPI in $100,000 increments. As a result, the current transfer balance cap for the 2023–2024 income year is $1.9 million. Based on the release of CPI index numbers from the ABS, this figure of $1.9 million will also apply for the 2024-25 income year, as the CPI figure for December 2023 was not large enough to trigger a $100,000 increase.
The transfer balance cap is a lifetime limit on the amount an individual can transfer into one or more retirement phase accounts. Individuals will have a personal transfer balance cap equal to the general transfer balance cap when a retirement phase income stream is commenced for the first time. For example, if an individual commences a retirement stream in the 2024–2025 income year, their personal transfer balance cap will be $1.9 million.
For individuals who started their retirement phase income stream in an earlier year with a lower general transfer balance cap, if the full amount of the personal transfer balance cap was never used, proportional indexing may apply. This means the individual’s personal transfer balance cap will be indexed based on the highest ever balance in the transfer balance account.
Where an individual exceeds their personal transfer balance cap, the excess is required to be commuted and excess transfer balance tax needs to be paid.