by Darren Withers

On the 14th of May Treasurer Jim Chalmers delivered a Federal Budget that was in many ways unsurprising. There were prudent and responsible measures, cost of living initiatives and promises to move on big issues like housing.  

There were also some announcements that related to superannuation. 

Superannuation

The government reiterated their previous announcement that from 1 July 2026, they will require employers to pay contributions into their employees’ super at the same time as salary and wages. This is expected to benefit employees with higher balances at retirement.  

The Treasurer also allocated $1.1 billion for parents accessing the government-funded paid parental leave scheme, to provide payments to superannuation.  This will be effective from 1 July 2025.  Super will be paid at the (then) super guarantee rate of 12 per cent of the paid parental leave rate.   

Outside of these measures, there were no substantial announcements with regard to super.  However, the 2023 budget item of a new tax on individuals who have superannuation balances in excess of $3 million is progressing through parliament.  The government hopes it will be legislated by 1 July this year, ahead of its 1 July 2025 commencement.  

Taxation

As previously announced, the Government has amended the previously legislated stage 3 tax cuts due in the 2024/25 financial year.  These cuts will deliver lower taxes for all taxpayers.  Compared to the current financial year, a taxpayer on $50,000 will save $929, those on $100,000 will save $2,179 and people with incomes of $190,000 and above will save $4,529.  

Cost of Living

Included in the expenditure plans was a number of measures designed to help with rising cost of living pressures.  

Electricity price relief for households was a focus. All households will be eligible for a $300 rebate on their power bills.  Eligible small businesses will also be eligible for a $325 rebate.  

Maximum prescription prices under the Pharmaceutical Benefits Scheme will also be frozen at the current level of $31.60 and $7.70 for pensioners and concession card holders.  

Seniors

The government has made a commitment to continue a freeze to the deeming rate.  This assessment of income on investments is typically increased as the cash rate is increased, but has been frozen at a maximum of 2.25% until 30 June 2025.  This will allow many age pensioners to maintain a higher pension and help keep down the cost of aged care.  

Funding will also be provided for an additional 24,000 home care packages to assist with the care demands of an ageing population.  

Housing

Almost $2 billion will go towards increasing all Commonwealth rent assistance rates by 10 per cent from September 20, 2024.  

In conclusion

While the government has aimed to address cost of living pressures, the reality is that for most, there will be little impact from this budget.  Perhaps the biggest planning opportunity might come in the form of tax planning, as a result of new tax rates.     

For further information on how these announcements may affect you, please speak to your adviser.