On 29 March 2022, Federal Treasurer, Mr Josh Frydenberg, handed down the 2022/ 23 Federal Budget. Responding to the increased cost of living, the Budget provides several measures to support businesses and individuals by temporarily reducing fuel prices, tax relief for low-to-middle income earners, incentives, and superannuation changes.
The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.
The superannuation highlights are set out below.
Extension of the reduction in superannuation minimum drawdown rates.
The halving of the superannuation minimum drawdown requirements for account-based pensions and similar products will be extended for a further year to 30 June 2023.
The minimum drawdown requirements determine the minimum amount of a pension that a retiree must drawdown from their superannuation in order to qualify for tax concessions.
Around 1.8 million super accounts are currently subject to the minimum drawdown requirements that apply to account-based pensions and similar products.
Under the reduced minimum drawdown rates, self-funded retirees aged between 65-74 must withdraw 2.5 per cent of their account balance each year to be eligible for tax-free status on their earnings.
The minimum drawdown rate is currently 3.0 per cent for ages 75-79, 3.5 per cent for ages 80-84, 4.5 per cent for ages 85-89, 5.5 per cent for ages 90-94, and 7 per cent for ages 95 and above, while a rate of 2 per cent applies to those under 65.
Source: Budget Paper No 2, p 28.
This article contains information regarding taxation and legislative change, which is based on policy announcements that are yet to be passed as legislation and may be subject to future change. Any advice included in this article is general and has been prepared without taking into account your objectives, financial situation or needs. As such, you should consider its appropriateness having regard to these factors before acting on it. Any tax information refers to current laws, is not based on your unique circumstances and should not be relied on as tax advice. Before you make any decision about whether to acquire a certain financial product, you should obtain and read the relevant product disclosure statement.