Issue 848, 29 March 2022 Budget 2022/23 edition
In this issue:
Overview
This year’s Federal Budget contained only one industry-wide superannuation measure – the extension of the temporary reduction in the income steam minimum drawdown rates – as well as a specific measure with respect to financial assistance for NSW police officers who have incurred a tax liability from exceeding the non-concessional contribution cap.
Other measures that potentially may affect super funds include various incentives for private sector investment in energy and emissions reduction and measures to provide tax concessions for innovations in low emissions technology, the agriculture sector, and in medicine and biotechnology.
One area where there has been a significant increase in government expenditure, in recognition of the changing strategic environment and increased risks posed by cyber threats and weaknesses, has been to increase the cyber and intelligence capability of the Australian Signals Directorate. The Government has also announced the sharing of Single Touch Payroll data with State and Territory Revenue Offices.
Details of specific superannuation measures
Extension of the temporary reduction in superannuation minimum drawdown rates
As foreshadowed in the media, the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products has been extended for a further year until 30 June 2023.
The minimum drawdown requirements determine the minimum amount of a pension that a retiree must draw from their superannuation each year. Given ongoing volatility, this change will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.
Financial assistance for NSW police officers regarding excess super contributions
The Australian Government is providing transitional funding for the equal sharing of the costs of reimbursing New South Wales police officers who incur an additional tax liability from making voluntary superannuation contributions that exceed the statutory cap on concessional contributions.
Funding covers liabilities incurred from 2016-17 to 2019-20 with reimbursements made in arrears over a five-year period. The funding will also contribute to the cost-sharing of any fringe benefits tax that results from reimbursing police officers in these situations.
Women’s Budget Statement – no superannuation specific measures announced
The Government released a separate Women’s Budget Statement in which they stated their committed to narrowing the gender pay gap and the gender superannuation gap by continuing to support increased participation.
The Women’s Budget Statement observed that
- lower workforce participation and differences in earnings impact women’s superannuation balances at retirement age. In 2018-19, the gender gap in median superannuation balances for persons aged 60-64 was 23.4 per cent. This reflects differences in workforce participation and earnings dating back decades
- lower financial security and independence put women at higher risk of poverty in old age and can make it harder for women experiencing family and domestic violence
- the superannuation gap is expected to narrow over time on account of the narrowing in the gender pay gap, increases in women’s workforce participation and the maturing of the superannuation system
- getting more women into the workforce and into higher paying jobs is the most meaningful way to increase superannuation balances over time.
Other measures that may affect superannuation funds
Miscellaneous amendments – Treasury portfolio legislation
The Government will make minor amendments to Treasury portfolio legislation that clarify the law to ensure it operates in accordance with the policy intent and make minor policy changes to improve administrative outcomes.
Energy and Emissions Reduction – measures to increase private sector investment
The Government will provide
- $247.1 million over 5 years (and $0.3 million per year ongoing) to support increased private sector investment in low emissions technologies including hydrogen, the continued development of a hydrogen Guarantee of Origin scheme, and the development of a Biodiversity Stewardship Trading Platform to support farmers to undertake biodiversity activities ahead of the introduction of a voluntary biodiversity stewardship market
- $148.6 million over 5 years to support more investment in affordable and reliable power, including the development of community microgrid projects in regional and rural Australia
- $50.3 million over 2 years to accelerate the development of priority gas infrastructure projects consistent with the Future Gas Infrastructure Investment Framework and support investment in carbon capture and storage pipeline infrastructure.
Northern Biosecurity Frontline – de-risking investment
The Government will provide funding to manage biosecurity risks in northern Australia, supporting the implementation of regional biosecurity plans and funding targeted actions to proactively de-risk investment and business operations, including the delivery of critical biosecurity infrastructure.
Changes to the Patent Box tax concession regime
The Government has introduced initiatives to encourage innovation, including changes to the Patent Box tax concession regime.
The changes include:
- expanding the patent box tax concessions to low emissions technology sector and agriculture sector innovations; and
- updating the policy specifications for tax concession for Australian medical and biotechnology innovations.
REDSPICE – Expanded cyber and intelligence capability
The Government will provide $9.9 billion over 10 years to the Australian Signals Directorate (ASD) to deliver a Resilience, Effects, Defence, Space, Intelligence, Cyber and Enablers package (REDSPICE).
REDSPICE is the largest ever investment in Australia’s intelligence and cyber capabilities and will
- double the size of the ASD
- triple the ASD’s offensive cyber capabilities; and
- double its cyber hunt and response activities.
This unprecedented investment will help the ASD to keep pace with the rapid growth of cyber capabilities of potential adversaries, including equipping it with the capabilities to be able to counter attack and protect critical systems.
Enhanced sharing of Single Touch Payroll data
The Government will commit $6.6 million over the forward estimates period for the development of IT infrastructure required to allow the ATO to share Single Touch Payroll (STP) data with State and Territory Revenue Offices on an ongoing basis.
Future Fund – extending income tax exemption to wholly-owned Australian incorporated subsidiaries
The Government will amend the law to exempt wholly-owned Australian incorporated subsidiaries of the Future Fund Board of Guardians (Future Fund Board) from corporate income tax.
Currently, the Future Fund Board is exempt from income taxes, but this exemption does not extend to its wholly owned subsidiaries. As a result, these subsidiaries pay corporate income tax, which is subsequently refunded to the Future Fund Board via franking credits attached to the dividends paid to it by the subsidiaries.
Extending this exemption will remove the administrative burden associated with the payment of tax by the subsidiaries and subsequent claiming of a refund. The measure will have effect from subsidiaries’ first income year after Royal Assent of the enabling legislation.
Additional resourcing – Office of the Information Commissioner
The Government will provide $17.0 million over 2 years to support the Office of the Australian Information Commissioner in undertaking its privacy and regulatory functions, including in relation to social media and other online platforms.
Machinery of Government Change – Digital Identities (Integrated Delivery Management)
There has been a transfer of the function of Digital Identity (Integrated Delivery Management) from the Digital Transformation Agency to the Australian Taxation Office and Services Australia.
ASFA REGULATORY WATCHLIST
ASFA’s Regulatory Watchlist (ARW) tracks developments in Legislation, inquiries, consultations
and other regulatory announcements relevant to superannuation.
