Super changes and Federal Budget 2023

Increase in superannuation guarantee contributions 

Although it was not announced as part of this year's Federal Budget, it’s important to note that the superannuation guarantee (SG) rate will increase on 1 July 2023 from the current rate of 10.5 per cent to 11.0 per cent. This change will affect all workers and employers in Australia—employers will be required to make super contributions into each employee’s super account at the increased rate of 11 per cent of their annual salary. Employees who are actively building their super balances by adding extra, say via salary sacrifice payments, may need to ensure that total payments made do not exceed the concessional contributions cap. 

Increase in frequency of super payments  

As mentioned in the Budget announcement, from 1 July 2026, employers will be required to ensure each employee’s super guarantee payments are made into their super accounts at the same time their wages are issued, rather than on a quarterly basis. This change may affect payroll systems and cashflow management and if you’re an employer, you may wish to contact your Prime Super regional manager to talk about the changes and how they may impact your business. 

New tax threshold for large super balances 

As previously announced by the government, as of 1 July 2025 all earnings on super balances in excess of $3 million (including combined super and pension balances) will attract an increased concessional tax rate of 30 per cent. Earnings on super balances below $3 million will continue to be taxed at the concessional rate of 15 per cent. Earnings will be adjusted for contributions and withdrawals. Defined benefits will be appropriately valued, and earnings will be taxed in a similar way to ensure equivalent treatment. This change to tax on earnings in super is expected to affect approximately 80,000 people in the 2025–26 financial year although more people will be impacted in time as their super balances grow and the $3 million threshold is reached. 

Minimum pension withdrawal amounts 

In response to the pandemic, the government temporarily reduced the minimum amount a retiree must draw as an income from their super each year. The minimum rates will only apply until 30 June 2023, and will thereafter increase as indicated in the table below. 

Changes to the transfer balance cap  

The transfer balance cap (TBC) limits the tax-free amount a retiree can transfer into a super pension account, and from 1 July 2023 will increase from $1.7 million to $1.9 million. If this affects you, your total super balance at 30 June must be less than the TBC in order for you to qualify for non-concessional contributions or be eligible for a co-contribution next financial year. Different rules apply to those with a defined benefits income stream. 

We’re here to help 

If you have questions about the changes to super or you’d like to talk to us about your super or retirement plans, phone one of our team members on 1800 675 839 between 8am and 8pm AEST Mon–Fri or email us. 

This article is current at the date of publication and is subject to change. It contains general information and does not take account of your specific objectives, financial situation or needs or personal circumstances. You should seek professional financial advice, consider your own circumstances and read our Product Disclosure Statement (PDS) before making a decision about Prime Super. For a PDS and Target Market Determination call 1800 675 839 or visit the primesuper.com.au/pds. Prime Super Pty Ltd ABN 81 067 241 016 AFSL 219723 RSE L0000277 (Trustee), Prime Super ABN 60 562 335 823 RN 1000276.