The new financial year has brought about several changes which SMSF trustees need be aware of so they can plan ahead and not get caught out. Creating a well-defined SMSF investment strategy is essential to effectively navigate these changes.
What’s New from 1 July 2023?
Superannuation Guarantee (SG) rate increase
The new SG rate has increased to 11% (up from 10.5%).
Non Concessional Bring Forward Contribution cap
Members under the age of 75 on 1 July 2023 may ‘bring forward’ two years of non-concessional contributions subject to their Total Super Balance on 30 June 2023 (which has also changed).
| Total Super Balance as at 30 June 2023 | Non-concessional contribution & bring forward available starting 1 July 2023 |
| Less than $1.68 million | 3 years ($330,000) |
| Greater than or equal to $1.68 and less than $1.79 million | 2 years ($220,000) |
| Greater than or equal to $1.79 and less than $1.9 million | 1 year ($110,000) |
| Greater than or equal to $1.9 million | Nil |
Minimum pension requirements – 50% reduction abolished
The temporary 50% reduction in the minimum pension requirement due to Covid-19 will no longer apply and the minimum percentage will revert to the standard rates:
| Age | Percentage of account balance at 1 July 2023 |
| Under 65 | 4% |
| 65 – 74 | 5% |
| 75 – 79 | 6% |
| 80 – 84 | 7% |
| 85 – 89 | 9% |
| 90 – 94 | 11% |
| 95 or more | 14% |
Total Super Balance Cap & Transfer Balance Cap increase
Both the Total Super Balance Cap and General Transfer Balance Cap will increase to $1.9m (up from $1.7m).
Every member will have their own personal Transfer Balance Cap depending on whether they have ever had a retirement phase pension or received a death benefit pension prior to 1 July 2022.
Government Co-contribution increase
The income eligibility threshold for Government Co-contributions will be $43,445 – $58,445 (up from $42,016 – $57,016), with the maximum entitlement remaining at $500.
Compulsory quarterly Transfer Balance Account Reporting
All SMSFs will be required to report their TBAR events quarterly regardless of the fund size – due 28 days after the end of the quarter where the event occurred. Previously annual reporting was permitted for funds with total balance less than $1m.
LRBA Safe Harbour Interest Rate increase
For those SMSFs which have adopted the ATO’s safe harbour terms on their Limited Recourse Borrowing Arrangements (LRBAs) on real property, the interest rate will increase to 8.85% (up from 5.35%).
What has stayed the same?
Contribution caps
The annual contribution caps remain as follows:
- Concessional $27,500
- Non-concessional $110,000.
Unused Concessional Contributions Cap Carry Forward
For members whose Total Super Balance was less than $500,000 on 30 June 2023, they may be able to utilise their unused concessional contributions caps on a 5-year rolling basis from the 2019/20 financial year.
Re-contribution of COVID-19 early release superannuation amounts
Where an individual has previously received a COVID-19 early release of superannuation, they will be able to re-contribute up to the amount they received without the contributions counting towards their non-concessional cap. These contributions:
- can be made between 1 July 2021 and 30 June 2030
- cannot exceed the total amount of super accessed under the COVID -19 early release, and
- cannot be claimed as a personal superannuation deduction.
Those wishing to do this need to notify their super fund in the approved form, either before or at the time of making the re-contribution.
Work test for personal concessional contributions
From 1 July 2022, the work test (ie. gainfully employed for least 40 hours over 30 consecutive days) will only apply if you wish to claim a tax deduction for the voluntary contributions you make to your SMSF, and this test can be met at any time in the financial year.
As always, if you have any queries in relation to the above, please don’t hesitate to contact your client manager.
Author: Anna Wong – Senior SMSF Manager at Premier SMSF Solutions
*Correct as of 26 July 2023
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.
