This year’s Federal Budget cost-of-living relief, job growth and women’s security. The key measures that you should be aware of as an SMSF trustee are outlined below. Should you wish to discuss how these may impact your personal circumstances or retirement plans please contact me to arrange a time to chat.

Extension of the temporary reduction in superannuation minimum draw down rates

The Government has extended the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023. The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their superannuation in order to qualify for tax concessions.

Given ongoing volatility, this change will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.

First Home Super Saver Scheme – Increasing the maximum releasable amount to $50,000

The First Home Super Saver Scheme (FHSSS) allows super contributions to be released for a deposit on a first home. The government will increase the maximum releasable amount of voluntary concessional and non-concessional contributions under the FHSSS from $30,000 to $50,000. The new $50,000 cap would apply from 1 July 2022.

This increase had already been announced in last year’s budget but presumably it features in this year’s announcements to tie in with announcements of expansions to the Home Guarantee Scheme and HomeBuilder.

The FHSSS is designed to increase the savings first home buyers can put towards a deposit, and treasury estimates this can mean of a boost of more than 30% compared with saving through a standard deposit account.

The budget papers provide a case study illustrating how a couple could use the FHSSS.

Case study

Cathy and Anthony each earn $95,000 per year and want to buy a home. Every year they each salary sacrifice $12,500 of pre-tax income into their superannuation accounts. After four years of saving, they have $43,245 each or $86,490 combined to put towards their first home. This is $20,946 (or 30%) more than if they were using a standard savings account with 0.05% interest per year.

Digitalising trust income reporting and processing

The Government will digitalise trust and beneficiary income reporting and processing, by allowing all trust tax return filers the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes. The measure will commence from 1 July 2024, subject to advice from software providers about their capacity to deliver.

Trust income reporting and assessment calculation processes have not been automated to the same extent as individual or company tax returns, resulting in longer processing times and limited pre-filling opportunities. This measure will reduce the compliance burdens on SMSF trustees (taxpayers), reduce processing times and enhance ATO processes. The Government will consult with affected stakeholders, tax practitioners and digital service providers to finalise the policy scope, design and specifications.

How can we help?

If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2022-23 Federal Budget, please feel free to give us a call to arrange a time to meet so that we can discuss your particular requirements in more detail.