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What does the new financial year hold?

As time is running out to implement superannuation strategies for the 2023 financial year, let’s turn our attention to what will be changing from 1 July 2023.


Superannuation guarantee contributions
Superannuation guarantee contributions are those compulsory contributions an employer is required to make for their employees.

From 1 July 2023, the rate of superannuation guarantee contributions increases from 10.5% of salary to 11.0%.

This means that for someone on an average salary of $90,000, their employer will be contributing an additional $450 to superannuation for them.

While on the topic of superannuation guarantee, currently, employers are not required to make superannuation guarantee contributions when an employee earns less than $450 per month.

However, from 1 July 2023, this minimum pay threshold will be removed, meaning employers will be obliged to make superannuation guarantee contributions for all employees aged 18 or older, irrespective of their monthly salary.

Superannuation guarantee is only payable for employees under 18 where they are employed on a full-time basis (i.e. more than 30 hours per week).

The superannuation guarantee rate is on track to progressively increase to 12% from 1 July 2025.


Transfer balance cap
The transfer balance cap is the maximum amount a person may transfer from the accumulation phase of their superannuation to a retirement income stream, such as an account-based pension.

The general transfer balance cap is increasing from the current $1,700,000 to $1,900,000 from 1 July 2023.

Those who have commenced a retirement income stream before 1 July 2023 may only benefit from a partial increase of their transfer balance cap. If you have fully used your transfer balance cap in the past, no additional increase is available.

However, the general transfer balance cap does not just apply to commence a retirement income stream. It is also applied when determining eligibility to make non-concessional (after-tax) contributions, receive the government co-contribution, or receive spouse contributions.

Generally, if an individual has a total superannuation balance that exceeds the general transfer balance cap, they are unable to make non-concessional contributions, receive the government co-contribution, or receive contributions made by an eligible spouse.

Increasing the general transfer balance cap to $1,900,000 will extend the opportunity for certain people to take advantage of the opportunity to contribute more to super.

Minimum pension payments
Superannuation legislation sets out the minimum level of income that must be drawn each year from an account-based pension.

For the past four years, primarily because of the initial downturn in investment markets following the outbreak of COVID-19, the government introduced a temporary 50% reduction in the prescribed level of income that had to be drawn from an account-based pension.

The 50% discount is to be discontinued from 30 June 2023.

The prescribed minimum income percentage, which is applied to the pension account balance, will become:

AgeMinimum income (%)
Under 654
65 – 745
75 – 796
80 – 847
85 – 899
90 – 9411
95 and over14

For many, the new financial year will bring new opportunities.

If you would like more information on any of the topics covered in this blog and how you might be affected, please speak with your licensed financial adviser.

Author: Peter Kelly, Centrepoint Alliance, 14th of June 2023

If you plan well, then you can retire well.  Come and speak to the friendly Financial Advisers and the team at Retire By Design on the lovely Northern Beaches who can help you with your Retirement Planning needs.