The long-awaited Division 296 tax has now passed both houses of Parliament and received Royal assent, becoming law under the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026.

While media coverage has focused on the so-called ‘$3m super tax’, the rules are more nuanced in practice. Division 296 affects certain high-balance super accounts, and the way the tax is calculated depends on several factors. This alert explains who is impacted, how the tax operates, and the key practical issues that are emerging.

Who is affected by Division 296

Division 296 applies to individuals whose total superannuation balance (TSB) exceeds $3m.

There are two thresholds:

$3m to $10m

• An additional 15 percent tax applies to the proportion of super earnings attributable to balances above $3m.

Over $10m

• A further 10 percent tax applies, resulting in a total additional tax of 25 percent on the relevant portion of earnings.

Both thresholds will be indexed to CPI, using incremental increases of $150,000 for the $3m threshold and $500,000 for the $10m threshold.

If your total super balance is below $3m, Division 296 will not apply. Division 296 will only apply if your TSB exceeds the relevant threshold.

What is actually being taxed

Division 296 does not tax:

• your total super balance
• your contributions
• withdrawals from super.

Instead, it applies to superannuation earnings, based on the proportion of your balance that exceeds the relevant threshold.

Super funds will continue to pay their usual tax on earnings, generally 15 percent. Division 296 operates at the individual level and effectively increases the tax rate on super earnings attributable to very large balances.

In broad terms, this means:

• earnings on balances above $3m may be taxed at up to 30 percent in total
• earnings on balances above $10m may be taxed at up to 40 percent in total.

An example of how Division 296 applies

Facts

• Total superannuation balance at 30 June 2027: $5m
• Superannuation earnings for the year: $400,000
• Member is in accumulation phase
• Balance exceeds $3m but is below $10m

Step 1: Determine the proportion of the balance above $3m

• Amount above $3m: $2m (TSB $5m – $3m threshold)
• Proportion above threshold: $2m ÷ $5m = 40 percent

Step 2: Apply this proportion to super earnings

• Earnings subject to Division 296: $400,000 × 40 percent = $160,000

Step 3: Apply the additional Division 296 tax

• Division 296 tax rate: 15 percent (between $3m and $10m only)
• Division 296 tax payable: $160,000 × 15 percent = $24,000

Total tax outcome

• The super fund continues to pay its normal tax on earnings
• The individual receives a separate Division 296 assessment of $24,000
• The individual can pay this personally or elect to release funds from super

This example illustrates that Division 296 does not apply to all earnings, only the portion attributable to the balance above $3m.

How earnings are calculated

Following industry feedback, the final legislation does not tax unrealised capital gains.

Instead, earnings are calculated using a realised earnings approach. Super funds will report realised, attributable earnings for affected members to the Australian Taxation Office (ATO) using approved methodologies.

Key points:

• Unrealised gains are excluded.
• Contributions are adjusted for.
• Special rules apply to pension phase income and defined benefit interests.

This change significantly reduces volatility risk compared to the original proposal.

How the balance threshold is tested

From the 2026–27 financial year onwards, an individual’s TSB will be measured at:

• the start of the financial year
• the end of the financial year.

The higher of these two balances will be used to determine whether Division 296 applies.

A transitional rule applies in the first year, where only the closing balance at 30 June 2027 is tested. This may create limited planning opportunities for individuals who have already met a condition of release.

Paying the Division 296 tax

The ATO issues the assessment to the individual affected.

Within 84 days, the individual can either:

• pay the tax from personal funds
• elect to release money from super, similar to the process under Division 293.

Key practical issues to be aware of

We are already seeing a number of recurring themes for impacted clients:

• Asset valuations matter more than ever, particularly for self-managed superannuation funds (SMSFs) holding property or unlisted investments.
• Capital gains tax (CGT) election will be available for SMSF’s assets at 30 June 2026 for Division 296 purposes only. The election is optional, must be applied to all CGT assets held directly by the fund, is irrevocable, and must be made by the due date of the fund’s 2026-27 tax return.
• Liquidity planning is critical, especially where super assets are illiquid.
• Spouse balance disparities can increase exposure over time.
• Defined benefit members will be subject to modified rules, with tax typically payable on retirement rather than annually.

What you should do now

If your total super balance is approaching or already exceeds $3m, consider:

• reviewing current and projected super balances
• ensuring valuation processes are robust
• modelling future earnings and potential Division 296 exposure
• revisiting contribution, pension, and estate planning strategies.

How SW can help

Navigating the new Division 296 tax can be complex, particularly for individuals with high super balances or SMSFs holding diverse assets. At SW, we have extensive experience in superannuation strategy, tax planning, and compliance, and we can help you understand your potential exposure, model future earnings, and develop practical strategies to manage the impact of this legislation. Our team can assist with valuation processes, liquidity planning, CGT elections, and contribution or pension planning to ensure your super arrangements remain efficient and aligned with your long-term goals. By working with SW, you gain tailored advice and actionable solutions to stay ahead of Division 296 requirements and make informed decisions for your superannuation and estate planning.

This publication is issued by SW Accountants & Advisors Pty Limited ABN 78 625 921 390 (SW) exclusively for the general information of clients and staff of SW and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name SW within Australia. The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. SW, and related entity, or any of its offices, employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in the publication.

Contributor

Dominic Lam

The post Division 296 tax has passed parliament and what it means for large super balances appeared first on SW Accountants & Advisors.

We summarise the main changes below and explain what they may mean for you.

Contribution caps from 1 July 2026

Concessional (before-tax) contributions

The annual concessional contributions cap will increase to $32,500. This cap includes employer Super Guarantee contributions, salary sacrifice contributions, and personal contributions for which a tax deduction is claimed.

If your total super balance was less than $500,000 at 30 June 2026, you may also be able to access unused concessional cap amounts from the previous five financial years under the carry-forward rules.

Non concessional (after-tax) contributions

The standard annual non-concessional contributions cap will increase to $130,000. Eligibility to make non-concessional contributions continues to depend on your total super balance at 30 June of the previous financial year.

Bring-forward rule thresholds

If you are under age 75, the bring-forward rule may allow you to contribute up to three years’ worth of non-concessional contributions in a single year. From 1 July 2026, the maximum amount you can contribute under the bring-forward rule, and the length of the bring-forward period, will depend on your total super balance at 30 June 2026.

The thresholds will be as below:

It is important to note that if you have already triggered a bring-forward period in an earlier financial year, you will remain subject to the previously applicable caps until that bring-forward period ends.

Transfer balance cap and flow-on impacts

From 1 July 2026, the general transfer balance cap will increase from $2.0m to $2.1m. This cap limits the amount that can be transferred into the tax-free retirement phase.

The increase in the transfer balance cap will also flow through to a number of other thresholds, including total super balance limits that determine eligibility for non-concessional contributions and bring-forward arrangements.

If you have already commenced a retirement phase income stream, any increase to your personal transfer balance cap will be proportionate and will depend on how much of your cap you have previously used.

What you should be thinking about now

With these increases approaching, it may be timely to:

• review your contribution strategy for the 2026-27 financial year
• consider whether delaying non-concessional contributions until after 1 July 2026 could allow larger amounts to be contributed
• check whether triggering a bring-forward arrangement before 30 June 2026 could limit your flexibility once the higher caps apply
• review your total super balance ahead of 30 June 2026 to understand future contribution eligibility.

As always, contribution strategies need to be considered in the context of your broader financial position, cash flow, and tax circumstances.

How SW can help

At SW, we can work with you to assess your current superannuation position and develop a tailored contribution strategy aligned with your broader financial goals. We can assist in reviewing your eligibility for concessional and non-concessional contributions, advising on the optimal timing of contributions, including bring-forward strategies, and assessing your total super balance and transfer balance cap position. We also ensure your approach is tax-effective and aligned with your cash flow and investment objectives.

If you would like to discuss how these changes may apply to you, please get in touch with your adviser.

Contributor

Dominic Lam

The post Superannuation contribution caps to increase from 1 July 2026 appeared first on SW Accountants & Advisors.

The Treasury Laws Amendment (Payday Superannuation) Regulations 2026 support the Treasury Laws Amendment (Payday Superannuation) Act 2025, and although many provisions simply restate existing exclusions, these two amendments are especially relevant for employers.

SW’s specialist employment tax team breaks down below what these changes mean. Employers must assess the impact of the new qualifying earnings framework, identify transition period compliance risks, and design payday-based models ahead of the 1 July 2026 start date.

What the regulations confirm

The regulations confirm that the types of employees and payments that do not attract super will continue to be excluded under the new qualifying earnings framework. In practice, the regulations largely restate and consolidate existing exclusions rather than making any material changes to superannuation guarantee obligations.

For employers, the key takeaway is that the in/out rules are not where the real compliance impact sits. The bigger operational impacts come from tighter contribution deadlines and the consequences of late payments under the redesigned charge regime.

Administrative uplift encourages early payment and prompt voluntary disclosure

The most significant change for employers in the regulations is the new scalable administrative uplift, which forms part of the redesigned Superannuation Guarantee Charge (SGC). The uplift starts at 60% of the relevant shortfall and notional earnings (interest) components for a qualifying earnings day, but it can be reduced through specific mechanisms that are designed to reward early action.

Why it matters

The structure is intentional and is designed to reward employers who identify issues early, disclose voluntarily, and make prompt payments, while making late detection and delayed action more costly.

How the uplift can be reduced

Employers have several ways to reduce the uplift outcome, as outlined below.

Early payment before Australian Taxation Office (ATO) action

When a shortfall is corrected and paid in full before the ATO begins any assessment activity, the rules allow the uplift to be limited to the notional SG interest component rather than the full shortfall.

Early voluntary disclosure

The uplift rate is reduced on a sliding scale depending on how quickly a voluntary disclosure statement is lodged.

Good compliance history

If the Commissioner has not initiated an assessment or estimate process in the previous 24 months, the default uplift percentage can be reduced.

Administrative uplift at a glance

Practical implication

Under Payday Super, the cost of being late is no longer a simple fixed add-on. It is structured to encourage early remediation and voluntary disclosure, making it far more important for employers to have processes that detect superannuation issues quickly enough to preserve these reductions.

The Commissioner’s discretion is limited to exceptional circumstances

The regulations specify the exceptional circumstances in which the Commissioner can extend contribution deadlines, such as natural disasters or widespread technology outages affecting contribution platforms.

The key message for employers is that the Commissioner does not have broad discretion to waive timing failures in ordinary business scenarios. Outside genuinely exceptional events, employers are expected to have systems, processes, and governance in place to meet the received-by-the-fund timing requirements under Payday Super.

What employers should do now

With commencement from 1 July 2026, employers should prioritise the following:

• Map end-to-end timing from the pay event through the clearing house to fund receipt, including cut-offs and bounce-back scenarios.
• Build an early detection SG process with exceptions reporting, rapid triage, and a defined remediation pathway.
• Plan for voluntary disclosure readiness by establishing governance and documentation to support timely disclosure when required.
• Stress-test onboarding data quality to ensure contributions can be processed smoothly within the tightened operating environment.

How SW can help

SW’s specialist employment tax team supports employers in translating the Payday Super reforms into practical, compliant payroll and superannuation processes. We help employers assess the impact of the new qualifying earnings framework, identify transition period compliance risks, and design payday-based models ahead of the 1 July 2026 start date. Where issues arise, we also support early remediation and voluntary disclosures under the revised SGC framework.

Contributor

Thomas Grimsey-Carr

The post Payday Super Regulations released: What employers need to know and why early action matters appeared first on SW Accountants & Advisors.

The proposals respond to ongoing governance concerns and recent high-profile scheme collapses, most notably the Shield Master Fund and the First Guardian Master Fund. Together, they placed more than $1bn of investor funds at risk. The Australian government is considering reforms aimed at reducing consumer harm, strengthening responsible entity (RE) accountability, and improving Australian Securities & Investments Commission’s (ASIC) visibility over scheme activities, superannuation switching, and sector-wide risks. Treasury is seeking feedback on these proposals, with submissions due by 27 February 2026.

The paper sets out 6 consultation points for feedback from the industry

1. Strengthening the compliance framework

• Stricter compliance plan requirements, including detailed scheme descriptions and significant risk controls.
• Liability for compliance plan breaches limited to material contraventions.
• Mandatory use of existing audit and assurance standards for compliance plan audits.
• REs to notify ASIC of appointment or resignation of compliance committee members.

2. Majority of external directors on responsible entity boards

• RE boards would be required to have a majority of external directors, eliminating the alternative option of a mandatory compliance committee.

3. Prohibition on related‑party transactions (with limited exceptions)

• REs would be prohibited from investing in or lending to related entities unless an exception applies. This responds directly to identified misconduct in past MIS failures.
• A potential solution outlined would be to outsource the RE function such that it is independent of the investment manager.

4. New framework for financial resource requirements

• ASIC considering higher net tangible asset (NTA) requirements.
• Treasury is seeking feedback on whether these requirements should be set out in legislation rather than in ASIC instruments.

5. Increased ASIC MIS data collection powers

• New recurrent and event‑based data reporting to address current gaps in MIS‑level visibility.

6. Alerts to ASIC about superannuation switching

• Mandatory alerts from superannuation trustees regarding suspicious switching activity, aimed at early detection of misconduct.

Who is impacted

How SW can help

SW brings deep financial services expertise with a strong focus on funds management and regulated investment structures. We work closely with responsible entities, investment managers, and trustees to navigate complex regulatory change and evolving governance expectations.

Our team can assist in assessing the impact of the proposed reforms on your governance framework, board composition, compliance plans, and related party arrangements. We also advise on financial resource requirements, capital implications, and enhanced reporting obligations, helping you strengthen risk management and internal controls in line with heightened regulatory scrutiny.

With integrated audit, assurance, risk, and advisory capabilities, we provide practical, commercially focused guidance to help you respond effectively to these reforms.

Contributor

James Serpell

The post Enhancing safeguards & governance in the managed investment scheme sector appeared first on SW Accountants & Advisors.

The legislation was passed by both Houses on 4 November 2025, and the ATO is now publishing operational guidance while signalling a far more data-driven compliance approach.

What’s changing

• Super moves from quarterly to every pay run (weekly/fortnightly/monthly).
• Super is calculated on 12% of ‘qualifying earnings’ (QE), a new term the ATO is using to bring together ordinary time earnings (OTE) and related concepts for Payday Super.
• Funds must receive the contribution within 7 business days of payday, unless an extended timeframe applies.
• Employers generally have 20 business days to make contributions to a new employee’s fund, or when contributing to a new fund for an existing employee.
• Complex remediation and disclosure requirements for non-compliance and updated penalty regime.

Why hospitality and gaming will feel this first

High-frequency payroll and high variability can cause more ‘near misses’

Weekly pays, late roster approvals, and last-minute adjustments, such as meal breaks, allowances, overtime, and penalty rates, increase the risk of shortfalls and late payments when super must follow every pay event.

Casuals, turnover, and onboarding volume

More starters and leavers mean more stapling/choice workflows, fund changes, and edge cases, now with tighter timeframes and more scrutiny.

Complex multi‑function operating models

Hotels, pubs, clubs, and groups often operate across multiple entities, awards, sites, and payroll files. Payday Super magnifies the impact of:

• incorrect wage code configuration
• split pay cycles (front-of-house vs back-of-house, events, contractors)
• off-cycle runs (terminations, backpay, corrections).

Tips, allowances, loadings, and ‘what counts’

If your payroll wage codes aren’t cleanly mapped to what is (and isn’t) superable under the new QE approach, you could end up with systematic underpayments or overpayments across thousands of micro-transactions.

The ATO is moving toward more data and more targeted compliance

The Australian Taxation Office (ATO) has published a risk-based first-year compliance approach (PCG 2025/D5) that categorises employers as low, medium, or high based on payment behaviour. It also makes clear that the ATO must still apply the law if a shortfall exists, even for employers who otherwise appear ‘low risk’.

You are more likely to hear from the ATO where non‑compliance exists. The compliance approach also reflects a shift toward active, risk‑based employer profiling, separating genuine compliance efforts from those not attempting to comply and cases of serious non‑compliance.

Practical ‘must-do’ focus areas for hospitality and gaming

1) Payroll process testing and clean-up

Confirm, test, or redesign your roster-to-pay workflow to ensure it closes quickly enough to calculate and pay the correct QE and super each payday.

Build a controlled process for employee superannuation data acquisition and superannuation fund payment rejections.

2) Wage code and earnings mapping clean-up

Review every earnings type, including penalty rates, overtime, allowances, leave types, bonuses and incentives, commissions, reimbursements, tips and gratuities, and backpay.

Align your wage code configuration with Single Touch Payroll (STP) and Payday Super reporting and calculation requirements, and don’t wait until June 2026.

Perform high-level or detailed data testing as needed to assess current compliance or identify systematic errors.

3) Pay cycle readiness

Confirm whether your pay cycle can reliably meet ‘received by fund in 7 business day’ at peak periods, as public holidays and weekends are particularly relevant for venues.

Design a process for off-cycle runs so super doesn’t fall through the cracks.

4) Cashflow and working capital planning

Moving from quarterly to per-pay super will cause a shift in cash timing, so model this now across weekly pay cycles and seasonal trading peaks.

5) Shortfall detection and voluntary disclosure capability

Establish a repeatable monthly control to reconcile payroll superannuation liabilities with fund receipts.

Develop a documented workflow to identify shortfalls early, along with a methodology for calculating, preparing, and managing disclosures when required.

6) Decide who owns what

Payroll, finance, HR, venue operations, and system vendors need a single implementation owner and a tested calendar covering configuration, parallel run, control testing, and go-live.

How SW can help

At SW, we help businesses, including those in hospitality and gaming, navigate the new Payday Super changes, helping you stay compliant and reduce risk. We can review your payroll and rostering processes to ensure super contributions are calculated correctly on every pay, even with weekly cycles, casual staff, and variable rosters. We help design workflows that manage off-cycle payments, high staff turnover, and super fund changes efficiently.

Our team can also help you understand the cashflow impact of moving from quarterly to per-pay contributions and implement controls to detect any shortfalls early. We provide advice and support for voluntary disclosures if needed and coordinate across payroll, HR, and finance to make the transition smooth and manageable.

With our expertise, you can be confident that your business is ready for Payday Super and that you can focus on running your operations without unnecessary stress.

The post Payday Super is coming for hospitality & gaming: Are your payroll and rostering systems ready for 1 July 2026? appeared first on SW Accountants & Advisors.

Impacted taxpayers  

From the 2026 income tax year and onwards, it is anticipated that groups with the following super funds or managed funds will be required to lodge an RTP:   

Background to the RTP Schedule  

Currently, large companies, which are part of groups that lodge Australian income tax returns disclosing $250m or more in revenue are required to lodge the RTP Schedule with their annual income tax return. The ATO provides further detail here. 

The RTP Schedule is designed to identify uncertain tax positions that large companies may have. It consists of three categories, each of which must be considered and completed. 

Category A  

Category A requires disclosures of material positions that are either:  

Category B  

Category B requires disclosures of:  

Category C  

Category C requires disclosures of:  

Potential areas of concern for large super funds and funds  

Whilst not an exhaustive list, the following taxpayer alerts and PCGs may be relevant to impacted super funds and other funds, and need to be considered as part of the completion of the RTP Schedule:  

How SW can help  

This is another example of the ATO gathering more data from taxpayers regarding arrangements it believes may give rise to Australian tax leakage, or where there is uncertainty in the Australian tax treatment. 

Although details are limited, these expected changes will impact larger funds and super funds for those completing their 2026 income tax return, as they will need to undertake a rigorous analysis to determine if they have a reporting obligation in the RTP Schedule.  

Our experts can assist you with identifying arrangements that are on the ATO’s radar, helping you better understand and proactively manage the appropriate tax treatment before the ATO raises any queries. This will give you greater certainty.   

We can also assist you in completing the RTP Schedule.   

Please reach out to your SW advisor for support from our team. 

Contributor

Stephen Peries

The post ATO expands Reportable Tax Positions Schedule to large super funds and CIVs appeared first on SW Accountants & Advisors.

After months of anticipation, on 9 October 2025, the Australian Treasury introduced legislation to Parliament to implement the Government’s Payday Superannuation proposal. This marks a significant change to how superannuation guarantee (SG) obligations are determined, paid, and reported. As highlighted in our previous article, ‘Payday Super – Consultation crucial to avoid an administrative and penalty minefield’, these changes are expected to have broad operational impacts for employers and payroll teams. 

In less than eight months, from 1 July 2026, employers will be required to pay SG contributions within seven business days of each payday, replacing the current quarterly cycle. 

The reform aims to reduce the estimated $5.2bn in unpaid superannuation and improve retirement outcomes for Australian workers. While the policy has been broadly welcomed, it introduces new compliance obligations and operational challenges that may place additional pressure on employers and their payroll teams.  

Key developments 

Earlier this year, the Australian government released draft legislation outlining the proposed shift to payday-based SG contributions. It required employers to pay contributions within seven calendar days of each payday and introduced a redesigned Superannuation Guarantee Charge (SGC) framework. This included the following: 

• a re-allocation of super contributions to the earliest payday if there are shortfalls 

• daily compounding variable interest 

• an annual maximum contributions base 

• alignment of superannuable earnings for calculation of the charge 

• greater choice loadings 

• new administrative and late payment penalties.  

The updated bills include several refinements, most notably, the timeframe for SG payments has shifted from calendar days to business days, aligning time requirements with typical business practices. Employers now have 20 business days to make contributions to a new employee’s fund or when contributing to a new fund for an existing employee. 

Concessional FY26 compliance approach  

The ATO has released Draft Practical Compliance Guideline PCG 2025/D5 outlining the compliance approach for the first year of implementation. It sets out a risk-based framework that categorises employers as low, medium, or high risk based on their payment behaviour.  

While it offers welcome relief for employers that make good attempts to adhere to the new rules, it does confirm that there is no intended amnesty for SGC under the new rules. It also signals a likely change to the ATO’s enforcement strategy from reactive to a targeted risk-based approach. This is made possible through a richer dataset from superannuation funds and payroll reporting. 

To facilitate a more pro-active compliance approach, the ATO will need to significantly increase its internal compliance and data resources. It will also need to develop sophisticated data models to assess employer compliance, account for any legitimate updates to employer information, and calculate the SGC when non-compliance is identified. These requirements could intensify early implementation challenges and place significant pressure on both existing and new ATO resources under the updated framework.   

Preparing for the change 

This is one of the most significant payroll changes since Single Touch Payroll, impacting not just the frequency of superannuation payments but also multiple operational systems, processes, and the ATO’s compliance approach. 

Employers have eight months to consider a range of matters, which may include the following: 

The ATO’s compliance approach has historically been reactive and not data driven (i.e. relatively manual) with SGC disclosures largely being voluntary or due to employee complaints. This is reflected in internal testing programs run by employers as well. For example, most testing programs stop at payroll system outcomes and do not test contributions at the fund level or choice of fund obligations. As a result, employers may find that current processes would not stand up to the requirements under the new regime. 

The new rules also similarly require disclosures by employers where shortfalls have occurred. The new charge calculations are complicated, and without ATO tools, systematic shortfalls may be beyond the ability of most employers to calculate broadly. 

There is the potential for significant stress on payroll teams as they grapple with implementing payroll system updates/changes in a short timeframe, manage more frequent superannuation processing, and adapt to new processes/legislative rules. 

This underscores the importance of early preparation and robust internal controls to mitigate compliance risks under the new requirements. 

How SW can help 

Our team has supported some of Australia’s largest superannuation rectification programs, giving us deep insight into the complexities of superannuation systems and compliance. Drawing on this experience, we recommend a proactive approach to the upcoming changes, including: 

• comprehensive testing of payroll and superannuation systems to identify and address gaps 

• mapping change requirements across people, systems, and processes 

• supporting the implementation of necessary updates to ensure compliance 

• providing training and resources (e.g. develop tools) to equip your teams for the new requirements 

• assisting with ongoing compliance monitoring and reporting. 

Early engagement will help your organisation minimise compliance risks, reduce administrative burden, and ensure a smooth transition to the new payday superannuation requirements.  

Our specialists are ready to work with you to develop a tailored implementation plan that ensures your systems, people, and processes are prepared well ahead of 1 July 2026. Beyond implementation, SW can continue to support your organisation with compliance monitoring, process reviews, and strategic advice as the ATO’s data-driven compliance framework evolves. Preparing early not only reduces risk but also positions your business to respond efficiently to future payroll and superannuation reforms.

Contributor

Oliver McDonald

The post Payday Super: Implications for employers & payroll operations appeared first on SW Accountants & Advisors.

The government has confirmed several important changes to the Division 296 proposed superannuation tax reforms. The updated measures aim to improve fairness while reducing the administrative burden and unintended impacts of the original proposal.

We’ve summarised the key updates and the practical steps you can take to prepare.

Key changes announced

Tax to apply only to realised earnings

The government has scrapped its plan to tax unrealised capital gains on super balances above $3m. The revised proposal will now apply only to future realised earnings, addressing major concerns about fairness and liquidity raised by tax professionals and fund managers.

Indexation of the $3m threshold

The $3m threshold will now be indexed in line with other superannuation limits. This change ensures that inflation and market growth do not gradually push more Australians into the higher tax bracket over time.

New $10m tier introduced

A second tax threshold of $10m will be introduced which will create a more progressive structure. Earnings between $3m and $10m will be taxed at 30%, while earnings above $10m will attract a 40% rate. Both thresholds will be indexed.

Implementation delayed until 1 July 2026

The introduction of the new tax has been delayed by one year, giving super funds, advisors, and affected members additional time to prepare. This adjustment also reduces the short-term impact on the federal budget.

Defined benefit pensions to be included

The revised design will ensure the new tax also applies to defined benefit pensions, maintaining consistency and fairness across different types of superannuation interests.

Boost for low-income earners

The Low Income Super Tax Offset (LISTO) will rise from $500 to $810, and the income eligibility threshold will increase from $37,000 to $45,000 from 1 July 2027. These changes will benefit an estimated 1.3m Australians, particularly women and part-time workers, helping them grow stronger retirement savings.

Budget impact of the reforms

Treasurer Chalmers confirmed the refinements will cost around $4.2bn over the forward estimates, mainly due to the one-year delay in implementation. He said the reforms “maintain the concessional treatment of superannuation, but ensure it is provided in a more equitable and sustainable way.”

How SW can help 

Our superannuation and tax specialists can help you understand how these changes may affect your personal or business super strategy. 

We can:

• review your super balance and investment mix to assess future tax exposure
• identify planning opportunities to manage contributions and withdrawals
• advise on the best way to structure your super for long-term efficiency and compliance.

These reforms will evolve as legislation progresses, so early planning is key. Contact your SW advisor to discuss how the new thresholds and timing changes could affect your retirement strategy.

Contributor

Julia Lee

The post Superannuation changes to Division 296 tax appeared first on SW Accountants & Advisors.

From 1 July 2024, the superannuation guarantee (SG) rate will increase from 11% to 11.5%, increasing the compulsory superannuation payments employers make to their employees.

The 0.5% increment will continue on 1 July each year until it reaches 12% in 2025.

What employers need to do prior to 1 July 2024?

To avoid any negative impact to employees, complete salary reviews before 30 June 2024. Provided the business can support the cost and cashflow, this will ensure the pay increments at least cover the increase to the employee’s cash salary component.

Employees who are packaged on a gross salary plus super arrangement will have no impact on their take home salary. Although, employers need to factor in the additional wages cost for the superannuation increment of 0.5%. This will mean the total wages costs will increase for other on-costs such as payroll tax and WorkCover.

Maximum Contribution Base (MCB)

The MCB will increase to $65,070 per quarter.

MCB is used to determine the maximum limit on any employee’s earnings base for each quarter in the financial year. Employers are not required to make the minimum SG payment for the part of earnings above the MCB.

Concessional contributions

From 1 July 2024, the concessional contributions cap will increase from $27,500 to $30,000, allowing individuals to add more to their super accounts.

Non-concessional contributions

The non-concessional contributions cap will increase from $110,000 per year to $120,000. This change will also affect the bring-forward rule which will increase to up to $360,000 depending on your super balance.

What’s not changing

Superannuation contribution payment due dates remain the same at 28days after the end of each quarter.

The superannuation guarantee charge (SGC) will apply when employers do not pay the SG to their eligible employees’ nominated superannuation fund by the due date.

The contribution quarters are as follows:

How can SW help?

SW has an experienced outsourcing team to assist with your payroll function. We can assist employers understand and become familiar with the new requirements to make this change as easy as possible, while also ensuring employers are meeting compliance requirements.

We can support with :

• Your employment taxes need
• as a registered tax agent we can request your stapled super fund details for employees
• assist in budgeting for these increases.

Contributor

Joshua Teo

The post Superannuation rate increase appeared first on SW Accountants & Advisors.

As part of the 2023-24 Budget, the Federal Government announced that from 1 July 2026, super must be paid on payday, a change that will contribute towards a ‘dignified retirement for all Australians’. 

Treasury has released the Securing Australians’ Superannuation consultation paper (the Paper), which will remain open until November 3, 2023. The Paper provides a number of areas for consultation, including in relation to: 

• defining payday super 
• updating the superannuation guarantee (SG) charge 
• compliance mechanisms 
• choice of fund and employee onboarding 

It is intended that stakeholder answers will help inform the design of payday super implementation and compliance frameworks. 

SW fully supports the intended purpose of the payday super to address the drivers of unpaid SG. Material change is required to systems and processes in employers, clearing houses, superannuation funds and the ATO to deal with increased frequency of contributions (up to 13 times) and tighter deadlines. 

Treasury’s openness to considering a broad spectrum of issues is commendable, with few topics being excluded. If not designed well, there are also numerous aspects of the proposed design which may unduly increase the administrative and regulatory burden on employers. 

SW is preparing a submission to Treasury addressing practical issues for Australian businesses in designing and implementing the payday super frameworks. While there are many matters that deserve consideration, we highlight several key consultation topics below and welcome your insights and feedback: 

• the transition from self-assessment system for SG obligations to ATO-driven recalculations and assessments. 

Employers who have conducted recalculations of pay and super will know that recalculations are rife with false discrepancies. It is proposed that under Payday Super, the ATO will recalculate superannuation obligations based on STP and superannuation fund reporting data. The ATO calculated superannuation shortfalls will result in “nudges” for employers to comply followed by assessments, moving away from the self-assessment system we currently have. 

Is it possible for the ATO to eliminate assessments resulting from false discrepancies, and if so, how might this be done? 

• due date for the making of superannuation contributions or receipt by the superannuation fund. 

Treasury has suggested either deadline based on when payment is made, or one based on receipt by the superannuation fund. 

Superannuation is often a subsequent process to finalisation of a pay run, and can involve significant manual intervention (e.g. in successfully producing and submitting the SAFF file). 

Is a same day due date for payment or a three day deadline for payment into the superannuation fund realistic? If not, how long would employers need to complete processing and comply with deadlines? 

• grace periods for employers to deal with payroll/Payday Super issues that will occur on a more frequent basis (from quarterly to payroll cycle). 

There are many circumstances that arise which can cause superannuation shortfalls, some of which outside the employers control. For example, incorrect superannuation fund details, or paid amounts being reclassified (e.g. an employee incorrectly claims overtime that is re-classified to ordinary pay).  

While proposed improvements in onboarding and superannuation stapling may reduce these instances, the increased frequency and tighter deadlines may result in more SG shortfalls. 

Currently, employers have the quarter and 28 days to correct issues that arise. 

Should there be a grace period which allows employers to correct shortfalls of superannuation? If so, what should be included as a concession in the grace period (interest, admin fees, income tax deductibility, SG calculations)? 

In addition, should the SGC calculation be made easier to assist with the administrative burden of compliance?  

How SW can help

While this has not been made law as of yet, we see a trend of increased transparency and compliance activity from the ATO in respect of superannuation compliance. In anticipation of these trends, or the proposed Payday Super changes, all employers should review the configuration of STP phase two reporting to the ATO as well as end -to -end superannuation processing to reduce the risk of superannuation shortfalls and review activity from the ATO or FWO.  

SW has designed an end to end offering which includes a review of time and attendance / payroll system configuration, and the use of advanced data analytics to test superannuation compliance and reporting to superannuation funds and the ATO.  

If you have any concerns with the proposed reforms or are interested to contribute to SW’s submission, please contact Paul Hum. 

Contributors

Eric Lay

Zainab Ayub

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