Highlights from the Federal Budget 2023/24

News and Announcements

11 May 2023

Highlights from the Federal Budget 2023/24

On 9 May 2023, Treasurer Jim Chalmers of the Albanese Government handed down his second budget, following the interim budget delivered in October last year. There are several areas that may be of interest to you, and we’ve summarised these for you below. 


From 1 July 2026, employers will be required to pay superannuation guarantee contributions on the same day that salary and wages are paid, rather than before 28 days after the quarter end. 

As a result, changes to the design of the superannuation guarantee charge rules will be required – i.e., the rules that dictate how shortfalls must be rectified. The Government plans to consult on the changes that will be required, with the final design to be considered in the 2024/25 Budget. Additional funding will also be provided to the ATO to strengthen their data matching capability in relation to monitoring compliance with the superannuation guarantee rules.  

Also on superannuation, from 1 July 2025, earnings on balances over $3m will be taxed at 30%, whilst earnings on the portion of balances under $3m will remain taxed at 15%. 

Electric Vehicles (EVs) 

As we already know, plug-in hybrid electric vehicles will no longer be eligible for FBT exemption from 1 April 2025, although arrangements entered into between 1 July 2022 and 31 March 2025 will remain eligible until they come to an end. This change is already legislated. 

Personal Income Tax 

No changes were announced to the personal tax rates, so the tax cuts previously legislated for implementation from 1 July 2024 will proceed. From that date, we will have three marginal rates for residents – 19%, 30%, and 45%, that apply above incomes of $18,200, $45,000, and $200,000 respectively. Further, the “low and middle-income tax offset” has now fully ceased and the “low-income tax offset” continues to apply, which also represents no change.  

Here is an example of the savings change, both pre and post the change on 1 July 2024. 

PBI Solutions PBI30 Budget Summary Table.jpg

SS PBI17 Budget Summary Table.jpg

Please note: The examples above are only designed to give an estimate of the savings an individual earning $80,000 ex-super
p.a may achieve and is not intended as a replacement for professional advice. Smartgroup is not licensed to provide taxation advice and it is recommended that a person seek the appropriate legal, financial, tax or other professional advice before making any decisions regarding salary packaging. All calculations have been updated to reflect the changes in the May 2023 Federal budget, are based on personal income tax rates and thresholds for the 2022/2023 financial year. The calculations do not take into account, any applicable: low income tax offsets (LITO), low and middle income tax offsets (LITMO), low income Medicare levy reduction, HECS/HELP debt repayments or any Smartgroup fees that may apply.

Medicare Levy 

The low-income threshold below where the Medicare levy does not apply, is to increase effective from 1 July 2022. For singles, this threshold moves from $23,365 to $24,276. 

From 1 July 2024, if the employee was eligible for a reduction in the Medicare levy in the two most recent years to which the lump sum accrues, no Medicare levy will apply to eligible lump sum backpay. To be eligible, the back pay must be more than 10% of the employee’s income in the year it is paid. 

We hope this summary has been helpful.

Questions around salary packaging programs and the benefits you could offer to your employees?