2018-19 Federal Budget Report: Superannuation

The Government continues to simplify superannuation measures, allowing workers to continue preparing for their post-working lives.

What was announced

  • Self-Managed Super Funds (SMSFs) now allowed to have up to 6 members
  • Increased data integrity regarding administration of Notice Of Intent to claim a deduction
  • Protecting your Super Package seeks to consolidate low superannuation balances into a single account and remove unnecessary insurance policy costs
  • Amendments to the work test to help recent retirees with low fund balances
  • Further technical amendments and administrative changes to make superannuation compliance easier

Changes for Self-Managed Superannuation Funds (SMSFs)

From 1 July 2019 SMSFs and small APRA funds will be allowed to increase the number of fund members from four to six. The Government expects this to provide greater flexibility for fund management, particularly for larger families.

Better integrity for personal contribution deductions

From 1 July 2018 the Government is enabling the ATO to increase compliance reviews of Notice of Intent (NOI) administration. Individual income tax returns will include a tick box to advise the ATO that NOI administration has been complied with. Failure to complete the required NOI documentation will result in the ATO amending individual income tax returns to deny the superannuation deduction.

Protecting your Super Package

From 1 July 2019 the measures introduced under the Protecting your Super Package will seek to protect and consolidate low or inactive superannuation balances, estimated to be around 9.5 million accounts in 2015-16. Funds with balances less than $6,000 will be protected with a cap on administration fees at 3% per annum and an exit fees ban on all superannuation accounts.

Funds with inactive balances of less than $6,000 will be transferred to the ATO who will use their data matching capabilities to transfer the balances to member’s active accounts. Further, certain accounts, which currently include default insurance policies will be changed to opt-in policies to avoid unnecessary balance erosion. Affected accounts include those with members aged under 25, accounts with balances less than $6,000, and accounts with no contributions in the previous 13 months that are inactive.

Helping Australians with low super balances

Ordinarily, people aged 65-74 are required to work a minimum of 40 hours in a 30 day period in order to be eligible to make voluntary superannuation contributions. From 1 July 2019 recent retirees with superannuation balances of less than $300,000 will be exempt from needing to satisfy the work test in the first year that they do not meet the work test requirement.