Tony and Anna of Trekk Advisory Brisbane review the new updates on Budget 2.0 superannuation and investors.
October 26, 2022 By Tony Madden

2022-23 Budget 2.0 – Superannuation & Investors


With seven months before the 2023-24 Budget released in May 2023, this Budget is a shuffling of the deck not a new set of cards. And to continue the pun, we need to play the hand we have been dealt, buffeted by externalities – war, floods, and global uncertainty.

There is nothing in this Budget that would create a UK style crisis. The stage 3 tax cuts legislated to commence on 1 July 2024 are not mentioned, and most funding initiatives appear to be a reallocation of previous Government initiatives. And, the commodity driven $54.4 billion improvement in tax receipts has largely been banked, not spent.

We've summarised the key points of the 2022-23 Budget 2.0 in a few different blogs, check them out here:

If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please let us know.

As always, we’re here if you need us!

Change to taxation of off-market share buy-backs by listed companies

From 7;30pm AEDT, 25 October 2022

From Budget night, 7:30pm AEDT, 25 October 2022, the Government intends to align the tax treatment of off-market share buy-backs undertaken by listed public companies with the treatment of on-market buy-backs. The result is expected to deliver a saving of $550m.

An on-market buy-back is when a listed company buys its shares back on the stock exchange. All other buy-backs are treated as off-market buy-backs.

Under the current rules, when a company undertakes an off-market buy-back it is necessary to consider which portion of the proceeds is taxed as a dividend and which portion is taxed under the CGT rules. Franking credits can potentially be attached to the dividend component.

On the other hand, when a listed company undertakes an on-market buy-back the full proceeds are generally taxed under the CGT rules and franking credits cannot be passed onto the shareholders.

Off-market buy-backs potentially offer a tax advantage to low-taxed shareholders such as superannuation funds. It appears that the Government has become concerned that the difference in the tax treatment between on-market and off-market buy-backs has been exploited inappropriately.

The Budget measure only refers to listed public companies which presumably means that the current tax treatment for off-market buy-backs undertaken by private companies and public companies that are not listed will continue to apply.

While this measure is yet to legislated, with a Budget night implementation date, this could have an immediate tax impact on the treatment of new off-market share buy-backs.

‘Downsizer’ eligibility reduced to 55

From First quarter after Royal Assent

As previously announced, the Government will reduce the age an individual can make a ‘downsizer’ contribution to superannuation from the current 60 years to 55 years of age.

Currently, eligible individuals aged 60 years or older can choose to make a ‘downsizer contribution’ into their superannuation of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home.

Downsizer contributions can be made from the sale of your principal residence in Australia that you have owned for the past ten or more years. These contributions are excluded from the age test, work test, and your total superannuation balance (but not exempt from your transfer balance cap).

Legislation enabling the expanding eligibility for downsizer contributions is currently before Parliament.

Delayed Relaxation of SMSF residency requirements

The 2021-22 Budget announced that the residency rules for Self-Managed Superannuation Funds (SMSFs) and small APRA regulated funds (SAFs) will be relaxed by extending the central control and management test safe harbour from two to five years for SMSFs, and removing the active member test for both fund types.

This measure was due to commence from 1 July 2022. The Government has announced that it will defer the start date to the income year commencing on or after the date of Royal Assent of the enabling legislation.

Scrapped 3 year SMSF audit requirement

Back in the 2018-19 Budget the Government announced that SMSFs with a history of good record-keeping and compliance – that is, three consecutive years of clear audit reports and annual returns lodged on time, will only be required to have their fund audited every three years.

The Government has now officially announced that this measure will not be proceeding.

Cryptocurrency not a foreign currency

As previously flagged, the Government will legislate to clarify that digital currencies such as Bitcoin will continue to be excluded from the Australian income tax treatment of foreign currency. The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency.

About Author

Tony Madden

Tony is a director of Trekk and based in our Brisbane office. He works heavily in the advisory space for his clients, focusing on strategic management consulting, mentoring, and resource planning with a driver of making a difference in their businesses and lifestyle. Tony has key strengths in building teams and is an active listener in working to address the pain points in clients' businesses. He had a passion for small business from a young age due to being brought up with a family of business owners. He's worked with larger corporations and not-for-profits, but he's always drawn back to helping and supporting small to medium (SME) businesses. That's why he's a Director of Trekk, because supporting SME is something we are all passionate about here. Outside of work, Tony has an active family with three sons that love sports, music and socialising. He enjoys having a drink and some laughs with mates and working on restoring his old EH Holden. He’s a passionate Eels NRL and Reds Rugby supporter with a love of vintage and muscle cars, 80’s Rock and keen runner (for the mind & body), Tony also has a laugh by 'acting the goat' at any event where he can embarrass his kids.

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