FY25 budget guide for superannuation and investors
Those with large superannuation balances will be disappointed that the 30% tax on super earnings on balances above $3 million remains in place, this is set to commence from 1 July 2025.
The following are key announcements contained within the Budget papers that affect superannuation and investors.
Expanding CGT regime for foreign residents
The foreign resident capital gains tax (CGT) regime will be expanded by:
- Clarifying and broadening the types of assets on which foreign residents are subject to CGT
- Amending the point-in-time principal asset test to a 365-day testing period
- Requiring foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed.
Shares in a company and units in a trust can be classified as TAP if the taxpayer and certain related parties hold at least a 10% interest in the entity and where more than 50% of the gross market value of the assets held by the entity is attributable to real property located in Australia and similar assets.
The measure is intended to ensure that Australia can tax foreign residents on direct and indirect sales of assets with a close economic connection to Australian land, bringing the treatment more in line with the tax treatment that already applies to Australian residents.
The new ATO notification process will improve oversight and compliance with the foreign resident CGT withholding rules, where a vendor self-assesses the sale doesn’t involve TAP.
The proposed reforms will also align Australia’s tax law for foreign resident capital gains more closely with OECD standards and international best practice.
The Government will consult on the implementation details of the measure, which is estimated to increase receipts by $600 million and increase payments by $8 million over the five years from 2023–24.
Superannuation on paid parental leave
As previously announced, from 1 July 2025 superannuation will be paid on Paid Parental Leave payments from 1 July 2025.
Eligible parents will receive an additional payment based on the superannuation guarantee (i.e. 12% of their PPL payments), as a contribution to their superannuation fund.
This payment is in addition to the changes that saw families provided with an extra two weeks of leave (22 weeks total), which will increase to 24 weeks from July 2025 and 26 weeks from July 2026 (see Paid Parental Leave Amendment (More Support for Working Families) Bill 2023, Royal Assent 20 March 2024).
Freezing social security deeming rates
When calculating Centrelink and Department of Veterans affairs payments, rather than assessing the actual income from financial investments, a deemed rate of return based on the total value of these investments is assumed. Some common examples of financial investments include bank accounts, term deposits, shares and managed funds.
The Government proposes to freeze the deeming rates (shown below) until 1 July 2025:
| Deeming rate | Single | Pensioner couple |
| 0.25% | Up to $60,400 | Up to $100,200 |
| 2.25% | Amounts over $60,400 | Amounts over $100,200 |
Pursuing entities in liquidation with unpaid superannuation obligations
The Government has announced that it will recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
The Fair Entitlements Guarantee Recovery Program aims to improve the recovery of employment entitlements advanced under the Fair Entitlements Guarantee (FEG). The FEG is a legislative safety net scheme of last resort with assistance available for eligible employees.
‘Payday’ super compliance
$60 million has been provided over four years from 2024–25 to increase the Productivity, Education and Training Fund to support practical activities by employer and worker representatives to boost workplace productivity and engage in tripartite cooperation. This will also support workplaces to implement policy changes such as the introduction of payday superannuation.
Preventing greenwashing and managing sustainable finance markets
Greenwashing - ASIC has been provided with $10m over 4 years and $1.9 million ongoing to investigate and take enforcement action against market participants engaging in greenwashing and other sustainability-related financial misconduct.
Green bonds - $5.3 million over 4 years from 2024-25 and $1.2 million ongoing has been provided to Treasury and APRA to deliver the sustainable finance framework, including issuing green bonds, improving data and engaging in the development of international regulatory regimes related to sustainable finance.
Labelling regime - $1.2 million has been provided to ASIC and Treasury to consult on the design of a labelling regime to regulate the use of sustainability labels on retail investment products.
WLM can help
This is general advice only and does not take into account your financial circumstances, needs and objectives. Information is current at the date of issue and may change. Before making any decision based on this article, you should assess your own circumstances or seek advice from your financial adviser and accountant.
Please contact us if you would like to review your current position and take advantage of the FY25 budget opportunities.
