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Issue 875,  25 October 2022-23 Budget Edition 
In this issue: 

 

Overview

The most noteworthy announcement in this year’s Federal Budget is the Housing Accord, which will offer new opportunities for investment into affordable housing by institutional investors, including superannuation funds. 

There is only one, previously announced, superannuation specific measure – the expansion of eligibility to make a downsizer contribution from age 60 to age 55. 

The Government has also provided certainty on unlegislated tax and super measures announced by the previous Government, indicating that some measures will not proceed and other measures will have their start date deferred. 

 

Details of specific superannuation measures

Housing Accord  

The Australian Government has announced that it will provide $350 million over 5 years from 2024 / 2025 to support funding of an additional 10,000 affordable homes under a Housing Accord with state and territory governments and other key stakeholders.  

The Accord will seek to facilitate superannuation and institutional capital investment in social and affordable housing, alongside established state and territory programs. The Commonwealth support will include availability payments over the longer term, to incentivise institutional investment through covering the gap between market rents and subsidised rents.  

The Government will collaborate to improve financing, including by the provision of availability payments and other innovative financing techniques, through the Housing Australia Future Fund (HAFF) and/or the National Housing Infrastructure Facility. This measure complements the Government’s investment in the HAFF, which will provide a further 30,000 social and affordable homes over 5 years.  

The Treasurer’s Investor Roundtable, a newly established forum, will bring together leaders from the investment community, including from some of Australia’s largest superannuation funds, in November to explore further areas of work to promote investment in housing.  

The Government has stated that, as some immediate actions under the Accord, it is seeking commitment from institutional investors, including superannuation funds, to 

The Government has also identified, as an area for further work under the Accord, that it is looking for institutional investors, including superannuation funds, to:  

 

Superannuation – expanding eligibility for downsizer contributions  

As announced previously, the Government will allow more people to make downsizer contributions to their superannuation, by reducing the minimum eligibility age from 60 to 55 years of age. The measure will have effect from the start of the first quarter after Royal Assent of the enabling legislation.  

The downsizer contribution allows people to make a one-off, post-tax, contribution to their superannuation from the proceeds of selling their home of up to $300,000 per person. Both members of a couple can make a contribution, and contributions do not count towards an individual’s non-concessional contribution cap.  

This measure provides greater flexibility to contribute to superannuation and aims to encourage older Australians to downsize sooner to a home that better suits their needs, thereby increasing the availability of appropriate housing for Australian families. 

In addition, the Government is  

This measure will reduce the financial impact on pensioners looking to downsize their homes in an effort to minimise the burden on older Australians and free up suitable housing stock for younger families.  

 

Providing certainty on unlegislated tax and super measures announced by previous Government  

The Government has determined that it will not proceed with a number of legacy tax and superannuation measures that were announced, but not legislated, by the previous Government, including:  

The 2013-14 MYEFO  

The 2016–17 Budget  

The 2018–19 Budget 

Further, the Government will defer the start dates of a number of legacy tax and superannuation measures to allow sufficient time for policies to be legislated and implemented, including:  

The 2021–22 Budget 

 

 

Other measures that may affect superannuation funds

Right to superannuation is to be included within the National Employment Standard 

To further strengthen the superannuation system, the Government has stated that it is committed to including a right to superannuation within the National Employment Standards, which will give workers the power to pursue their unpaid superannuation as a workplace entitlement.    

 

International Tax – Australia-Iceland Tax Treaty  

On 12 October 2022 the Government signed the Convention between Australia and Iceland for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance.  

The Convention facilitates trade and investment between Australia and Iceland by relieving double taxation, lowering withholding tax rates and improving certainty for taxpayers in both countries. It also gives effect to the G20/OECD Base Erosion and Profit Shifting recommendations, in accordance with the Government’s commitment to tax integrity.  

 

Improving the integrity of off-market share buy-backs  

The Government will improve the integrity of the tax system by aligning the tax treatment of off-market share buy-backs undertaken by listed public companies with the treatment of on-market share buy-backs. This measure will apply from announcement on Budget night.  

 

Fighting Online Scams  

From 2022 / 2023 the Government will provide $12.6 million over 4 years to combat scams and online fraud to protect Australians from financial harm. Funding includes 

 

New cyber security measures for government agencies  

In 2022 / 2023 the Government will provide $31.3 million in additional funding to provide cyber security services to government agencies with fewer resources as part of its ‘whole-of-Government’ Cyber Hub program uplift package.  

 

APRA performance measure  

APRA has stated that one of its performance measures for 2022/2023 is to reduce the number of:  

 

ATO performance measures regarding the Superannuation Guarantee  

The ATO has specific performance measures with respect to the Superannuation Guarantee (SG) around: 

 

Commonwealth Penalty Unit – increase in amount  

From 1 January 2023 the Government will increase the amount of the Commonwealth penalty unit from $222 to $275.  

The increase will apply to offences committed after the relevant legislative amendment comes into force.  

The amount will continue to be indexed every 3 years in line with the CPI as per the existing schedule. Penalty units are used to describe the amount payable for fines under Commonwealth laws, including in relation to communication, financial, tax and fraud offences. Fines are calculated by multiplying the value of one penalty unit by the number of penalty units prescribed for the offence.  

This measure ensures that financial penalties for Commonwealth offences continue to remain effective in deterring unlawful behaviour and contribute to budget repair 

 

Incentivising pensioners into the workforce  

From 2022 / 2023 the Government will provide $61.9 million over two years to provide age and veterans pensioners a once off credit of $4,000 to their Work Bonus income bank.  

The temporary income bank top up will increase the amount pensioners can earn in 2022 / 2023 before their pension is reduced from $7,800 to $11,800, supporting pensioners who want to work or work more hours to do so without losing their pension entitlements. 

 

Lifting the Income Threshold for the Commonwealth Seniors Health Card  

The Government will increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.  

The Government will also freeze social security deeming rates at their current levels for a further two years, until 30 June 2024, to support older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living. 

 

 

ASFA REGULATORY WATCHLIST

ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations

and other regulatory announcements relevant to superannuation.

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