- Minimum Pension Expected to Revert to 100% for Financial Year 2024 (FY24).
The government did not announce any extension of the 50% reduction on the pension minimum drawdown requirements, which have been in effect since the 2019/20 financial year (COVID). This means minimum drawdowns will likely DOUBLE from 1st July 2023 as per the schedule below.
- Legislated ‘Stage 3’ Tax Cuts – 1 July 2024 (FY25)
The former government legislated three stages of personal income tax cuts commencing 1 July 2018. Stage 3 (with the largest reduction) is due to take effect on 1 July 2024. With the new government committing to them at the last election, and nothing new announced in the May 2023 Budget, they remain legislated and included in the forward estimates to take effect on 1 July 2024. However, per our earlier comments, anything could change in the next 12 months. If they do commence as planned, there will be new planning points to consider and we will discuss these with you over the year ahead.
- $3M Super Tax Concessions to Reduce for Large Member Balances – Proposal 1 July 2025 (the 2026 Financial Year).
To make the tax system more equitable, the Government has proposed 30% tax on earnings for superannuation member balances over $3M, up from 15% (i.e. the proportion of earnings earned on the balance in excess of $3M will incur the extra tax). The new proposal has some quirks which are highly unpopular including the taxing of unrealised gains and NO future indexation of the threshold (which in high inflation times like today will capture a lot more people in years to come). With 2 years until this commences and the fact that members can make unlimited tax-free withdrawals post age 60 (in most cases), our suggestion is to maintain a business as usual approach and we will fully consider the options for relevant clients as more data comes to hand. Having said this, as always please call anytime with your questions.