Super balances above $3m consultation paper released
Treasury has released a consultation paper addressing the announcement to increase the tax rate for superannuation fund earnings from 15% to 30% for individuals with account balances above $3 million. The closing date for submissions is 17 April 2023.
The intention is to increase the headline tax rate from 15% to 30% for earnings corresponding to the proportion of an individual’s super balance that is greater than $3 million. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15% (or zero if held in a retirement pension account).
The paper seeks feedback on the way in which Treasury will seek to implement the measure, outlined below.
- It will apply to individuals with a total superannuation balance (“TSB”) of more than $3 million. An individual’s TSB is the combined value of all their super accounts. Where an individual holds more than one account, for example, an account in an SMSF and an account in an APRA-regulated fund, the TSB is the combined value of both accounts.
- The measures will commence on 1 July 2025 and apply from the 2025-26 financial year onwards. This means individuals with a TSB of more than $3 million on 30 June 2026 will be subject to the new arrangements.
- Earnings on the part of an individual’s TSB over $3 million will attract an additional 15% tax. Earnings for this purpose will be calculated using a formula. Where an individual has multiple super accounts, a combined earnings amount will be calculated. If an individual has negative earnings, these can be carried forward indefinitely and offset against future earnings. Tax will be applied to part of the calculated earnings on a proportional basis. The proportion will be equal to the proportion of an individual’s TSB which is more than $3 million.
- The additional tax will be applied directly to the individual.
- The ATO will collect the relevant information and calculate the tax liability from information already provided to it for SMSFs, although existing reporting arrangements may need to be expanded for APRA-regulated funds.
Once the ATO has calculated the tax liability, a notice of assessment will be sent to the individual. Similar to the payment options for Div 293 tax, the individual can choose to pay the tax directly using personal assets or, alternatively, they can choose to release money from their super account.
Preparing to conduct your SMSF Audits
The following information is available on the ATO website
‘As an SMSF auditor, it’s your responsibility to:
- carry out the annual financial and compliance audit of an SMSF’s operations.
- provide the Self-managed superannuation fund independent auditor’s report (NAT 11466) to trustees within 28 days of receiving all documentation.
To prepare for auditing an SMSF:
- check you have met all your professional requirements.
- ensure you understand your responsibilities when accepting an engagement with a fund, including compliance with the independence requirements.
We also have information on conducting an audit that could help you:
- Financial audit
- Compliance audit
- Auditing an SMSF that is winding up.
We recommend you review our auditor checklist to ensure your audit file contains all required quality checks and documentation.’
Business Services:
FBT: LAFHA reasonable amounts for meals
For Australian locations, starting from 1 April 2023, The ATO has released the weekly amounts it considers reasonable for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the 2023-24 FBT year.
Living Away (Overseas) – Please see ATO linking.
FBT: cents per kilometre rates 2023-24
The ATO has published the cents per kilometre rates for calculating the taxable value of a fringe benefit arising in the 2023-24 FBT year from the private use of a motor vehicle (other than a car). The rates are:
- for vehicles with an engine capacity of up to 2,500cc – 62 cents/km;
- for vehicles with an engine capacity of over 2,500cc – 73 cents/km; and
- for motorcycles – 18 cents/km.
Source: IPA Australia
