Labor’s second federal budget contained few surprises related to superannuation, with the government confirming previously announced measures including payday super and a higher tax rate for super balances above $3 million.
These measures have been broadly welcomed by much of the super industry, including peak bodies like Industry Super Australia (ISA). But the budget has prompted parts of the industry to call for more change, while others have urged the government to reconsider its approach.
Here’s an overview of how the Australian super industry reacted to the 2023–24 budget:
Reduced tax concessions
From 1 July 2025, earnings on super balances exceeding $3 million will attract an increased concessional tax rate of 30 per cent. Meanwhile, earnings on balances below $3 million will continue to be taxed at the concessional tax rate of 15 per cent.
“Tonight’s budget revealed the new tax on superannuation balances over $3 million will raise an unprecedented $2.3 billion each year from 2027–28, its first full year of operation,” Financial Services Council (FSC) chief executive officer Blake Briggs said in a statement on Tuesday.
The Australian Institute of Superannuation Trustees (AIST) said that the increase in the concessional tax rate would help to address the inequity of super tax concessions.
The move was also welcomed by Industry Super Australia and HESTA, which called on the government to direct the savings towards delivering a fairer and more equitable super system.
However, the SMSF Association urged the federal government to reopen its industry consultation on the proposed $3 million superannuation tax threshold.
“Further consultation about this new tax is imperative so that the full impact on the small business and farming communities and others can be properly considered,” argued SMSF Association CEO Peter Burgess.
“The previous consultation phase was only 18 days, including Easter, and that was simply insufficient time for the industry to fully identify all the issues. We understood the need to finalise things for the budget, but that should not come at the expense of rushing important legislation with unintended consequences.”
In particular, the SMSF Association highlighted issues with the taxation of unrealised gains as outlined by the government in a consultation paper released in March.
Payday super and super guarantee compliance
From 1 July 2026, employers will be required to pay their employees’ super guarantee (SG) entitlements on the same day that they pay salary and wages.
Additionally, the government has confirmed that it will provide $40.2 million to the Australian Taxation Office (ATO) in 2023–24 in order to ensure SG compliance.
Describing the new measures as a “win for workers”, AIST CEO Eva Scheerlinck said that they would help improve the retirement balances of millions of Australians.
“It will also enable employees to identify underpayment or non-payment of their super earlier and approach their employers and, if necessary, the Australian Taxation Office, to rectify the situation before it gets out of control,” she added.
According to ISA CEO Bernie Dean, aligning payment of super and wages is the right thing to do by Australian workers. But he further suggested that the move will boost government revenue, lift investment returns and put all employers on a level playing field.
NALI changes
In the budget, the government announced that it would amend the non-arm’s length income (NALI) provisions which apply to expenditure incurred by super funds.
As part of the amendments, large APRA-regulated super funds will be exempt from the NALI provisions for both general and specific expenses of the fund.
“The practical effect of the NALI amendment is that large APRA regulated superannuation funds can continue with existing service arrangements that are in the best financial interests of their members,” commented the deputy CEO of the Association of Superannuation Funds of Australia (ASFA), Glen McCrea.
“ASFA has long advocated for appropriate targeting of the NALI provisions and appreciates the government’s rigorous consultation and pragmatic decision.”
Additionally, for SMSFs as well as small APRA-regulated funds, income that is taxable as NALI will be limited to twice the level of a general expense.
“Although this proposal is an improvement, a factor-based approach is neither a practical nor desirable solution for the sector. It will require SMSF trustees to determine if a general expense has been undercharged and by how much,” Mr Burgess stated.
Sarah Abood, CEO of the Financial Advice Association Australia (FAAA), said that while more clarity had been provided around NALI, the announced changes were “a little surprising”.
“Limiting the income that is taxable as NALI to twice the level of a general expense, and exempting any that occurred before 2018–19, was not what was expected following consultation. Financial advisers will need to carefully consider the impact on any self-managed super fund clients who are affected,” she said.
“On both NALI and the pre-announced super changes, we look forward to engaging with Minister Jones and communicating more detail on these changes to our members when it is available.”
Other measures
Meanwhile, Rest CEO Vicki Doyle said that the government’s sustainable finance agenda and the new Net Zero Authority were of key significance to the fund and its members.
“The commitment to a sustainable finance framework, including a sustainable finance taxonomy, sovereign green bonds, and mandatory climate-related financial disclosure requirements, in tonight’s budget, will provide certainty for institutional investors like Rest,” she said in a statement on Tuesday.
“Having a framework in place will bring consistency, comparability, and confidence to the finance sector and should help to stimulate investment and member-friendly product disclosures.”
HESTA CEO Debby Blakey said the development of the sustainable finance agenda would assist investors manage climate risk in their portfolios, with the new taxonomy providing a clear framework to invest in new green opportunities and help high-emitting sectors transition.
“When it comes to investing in the transition, investors want haste without waste,” she said.
“A taxonomy will give investors greater certainty and the confidence to commit capital over the long-term timeframes typically required for energy transition investments.”
AIST, ISA, and HESTA also reiterated their calls for the government to extend the eligibility for the low-income super tax offset (LISTO) and pay super on commonwealth parental leave.
