2023/24 Federal Budget

The Federal Government’s May 2023 budget was delivered during a period of rising inflation, escalating interest rates, continuing geopolitical instability and heightened risks of significant and ongoing global financial system disruption.

Global growth forecasts are said to be the weakest in two decades, with Australia’s own economic growth expected to slow from 3.25% in 2022-23 to 1.5% in the 2023-24 year, after which a recovery to 2.25% is forecast.

2023/24 Federal Budget snapshot

• $4.2b surplus mainly driven by high commodity prices, a strong labour market and higher short-term migration numbers, with a return to deficits forecast for at least the next three years, and likely beyond.
• Ongoing economic challenges due to inflation and interest rates predicted to continue rising. GDP expected to slow from 3.25% this financial year before falling sharply to 1.5% next year then stabilising at around 2% - 3% thereafter.
• Consumer price growth is forecast to fall from 6% in the current year back to just over 3% next year, and thereafter, return to between 2% and 3%, in line with the Reserve Bank’s target band.
• Overall, the Budget recorded a slim $4.2 billion surplus – the first in 15 years – however is forecast to return to deficits over the forward estimates.
• Cost-of-living pressures were a central theme of the Treasurer’s Budget presentation with a range of measures announced aimed at relieving these challenges, with Australia’s transition to clean energy also an important theme.

Superannuation reforms

Payday super and recovering unpaid super:

• From 1 July 2026, employers will be required to pay their employees’ super at the same time as their wages, with the Australian Taxation Office (ATO) receiving an allocation of $40.2 million to oversee this requirement and improve recovery rates of unpaid super.
• The Government will also oversee a greater focus on recovering unpaid super by medium and large businesses.

Increased tax on super balances over $3 million:

• From 2025/26, the concessional tax rate on super balances over $3 million will increase from 15% to 30%.

Additional super-related information:

• The Superannuation Guarantee (SGC) schedule of increases remains in place with the next increase, to 11% on 1 July 2023.
• The COVID-19 minimum drawdown relief scheme for account-based pensions and annuities introduced for four years in 2019-20 will not be extended, ending on 30 June 2023.
• No announcement was made on the funding of superannuation on the Commonwealth Paid Parental Scheme.

Some of the other measures announced

• No changes to stage 3 income tax cuts
• $14.6 billion cost of living assistance package
• 15% pay increase for aged care workers
• Tax concessions for build-to-rent developments
• 15% increase in rent assistance and $10 billion for the Housing Australia Future Fund
• 15% global and domestic minimum tax for large multinational companies
• 90% cap placed on Petroleum Resources Rent Tax deductions

 

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