Federal Budget 2025

In this month's Exploring Super podcast, we chat about the most recent federal budget and the impacts on super.

__________________________

The Board recommends that you seek financial advice before acting upon this information.

Content was up to date at time of recording and thresholds do change due to federal legislation. For more information on eligibility for todays, content please refer the Australian Taxation Office (ATO) website at ato.gov.au

Investment returns cannot be guaranteed as investment markets can be volatile. As a consequence, returns can be positive or negative. Past investment performance is not a reliable indicator of future performance.

Benefits in ESSSuper’s Accumulation Plan, Income Streams and Beneficiary Account products are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Australian Financial Complaints Authority (AFCA). ESSSuper comes under the jurisdiction of the Victorian Civil and Administrative Tribunal (VCAT).

This website contains links to other websites which are not under the control of and are not maintained by ESSSuper. ESSSuper is not responsible for the content of those sites. ESSSuper provides these links for your convenience only but does not necessarily endorse the material on these sites. 

The information contained on this website is of a general nature only. It should not be considered as a substitute for reading the relevant ESSSuper handbook or Product Disclosure Statement (PDS) (and associated target market determination) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available on our PDS and handbooks webpage or by contacting us.

For more details on superannuation thresholds please refer Australian Taxation Office website. https://www.ato.gov.au/ 

Transcript

00:00:02 

You're listening to Exploring Super, the exclusive podcast for ESS Super members. 

00:00:10 

Welcome to Exploring Super, the exclusive podcast for ESS Super members. 

00:00:15 

My name's Christian Kueng and I'm the Manager of Member Education. 

00:00:18 

And I'm Felicity Brasher, the Group Executive of Member Engagement. 

00:00:22 

And today we have Michael Blackman, our Defined Benefit Technical Training Manager, joining us. 

00:00:28 

Hi, Michael. 

00:00:29 

Hi, Felicity. 

00:00:30 

Hi, Christian. 

00:00:30 

Thanks for joining us today, Michael. 

00:00:32 

And I believe you've come on to have a chat to us about the recent budget update and some planned changes to superannuation in the new financial year. 

00:00:41 

That's right. 

00:00:42 

So yeah, look, no big reforms or structural changes this year, but plenty to keep us on our toes. 

00:00:47 

Right. 

00:00:47 

Maybe you can give us a brief run through of what was in the budget and what, I guess, in particular, was related to superannuation. 

00:00:55 

Yeah, sure. 

00:00:55 

As I said, look, not a heap this year. 

00:00:58 

But look, I'll start with a previously announced proposal that, although it's not yet legislated, is on the track for implementation for 1 July 2026, and that's payday super. 

00:01:07 

Right. 

00:01:08 

Now, this measure requires employers to pay super at the same time as wages. 

00:01:12 

And look, this will ensure the right amount of super goes to individuals at the right time. 

00:01:16 

So it's a really welcome change. 

00:01:18 

In terms of allocating funds to super and tax-related measures, 

00:01:22 

The government will provide the Australian Taxation Office with $999 $1,000,000 / 4 years to strengthen the fairness and sustainability of Australia's tax system. 

00:01:31 

This includes $402.6 million in additional GST payments to states and territories and $31 million in unpaid super to be dispersed to Australians. 

00:01:41 

Wow. 

00:01:41 

Which is great. 

00:01:42 

Yeah. 

00:01:43 

They also confirmed some thresholds are changing in line with indexation, so these were scheduled. 

00:01:47 

We'll go through that in a bit more detail later and take a look at some of the other things announced in the federal. 

00:01:52 

budget. 

00:01:52 

So what are some of the main announcements from this year's federal budget? 

00:01:55 

Yes, so all Australians will receive power bill relief again. 

00:02:00 

Excellent. 

00:02:01 

Yeah, that's right. 

00:02:01 

So from this July, every household and about 1 million small businesses will have energy rebates. 

00:02:08 

Now, in terms of what that means for the individual, it would be $150 and that's automatically applied to electricity bills every quarter. 

00:02:15 

Okay, so nothing the individual needs to do. 

00:02:17 

Wow, like that? 

00:02:18 

So Medicare received a big allocation this year, so 

00:02:22 

billion over 4 years. 

00:02:24 

This investment will go towards making 9 out of 10 GP visits free by 2030. 

00:02:29 

Wow. 

00:02:30 

Yeah, and look, that's equivalent to 18 million extra bulk billed GP visits per year. 

00:02:36 

That's great. 

00:02:36 

That is great. 

00:02:37 

Which is great. 

00:02:38 

So government will also spend $784.6 million to limit the cost of pharmaceutical benefit scheme scripts to a maximum of $25. 

00:02:47 

1.8 billion going towards new and affordable medicines. 

00:02:51 

Just a small note 

00:02:52 

The Medicare levies will also be increased at this time. 

00:02:54 

Okay. 

00:02:55 

There was some housing support in the budget this time around, so the government has committed to providing states and territories with $9.3 billion towards social and affordable housing over a decade. 

00:03:06 

The existing help to buy scheme, so this has been in place for a while now, it will be broadened by permitting home buyers to co-buy their property with the government. 

00:03:15 

Okay, and under this broadened scheme, the government would own either a 30% stake of an existing home or 40% of a new build, which the homeowner can... 

00:03:25 

buy out over time. 

00:03:26 

Okay, that's positive. 

00:03:28 

Yeah. 

00:03:29 

Also, under this broadened scheme, foreign buyers, investors, if you like, are to be banned from purchasing existing dwellings for two years. 

00:03:37 

Be interesting to see what that does. 

00:03:39 

Yeah, that's right. 

00:03:40 

Also, just a final note, just quickly, the First Home Super Saver scheme, there were no changes to the conditions of that measure. 

00:03:47 

Okay. 

00:03:48 

Michael, I did hear that there was going to be some good news about the reduction in income tax. 

00:03:54 

Is that right? 

00:03:55 

Yeah, that's 

00:03:55 

That's right. 

00:03:56 

So there'll be some minor reductions in income tax from 1 July 2026. 

00:04:01 

So I'll go through what those personal income tax cuts are for 26 and for 27. 

00:04:06 

So there'll be reductions to the personal income tax rate for earnings between $18,200 and $45,000. 

00:04:14 

with rates decreasing from 16 to 15% from 1 July 2026 and from 15 to 14% from 1 July 2027. 

00:04:23 

So you probably want to know what that actually means in practical terms. 

00:04:26 

So taxpayers will receive a tax cut of up to $268 from 1 July 2026. 

00:04:34 

increasing to $536 from 1 July 2027. 

00:04:38 

Again, deeming rates have been frozen on assets for the Centrelink age pension, remaining at current levels until 30 June 2026. 

00:04:45 

So what changes will we see come through for the 1st of July? 

00:04:48 

Yeah, so 1 July this year, the percentage used to calculate additional contributions made to emergency services defined benefit members who have reached their maximum multiple, that'll increase from 9 to 11%. 

00:04:58 

Excellent. 

00:04:59 

That's nice. 

00:05:00 

Which is great. 

00:05:01 

With regards to the super guarantee contribution, 

00:05:03 

or SG cons, the government has proceeded, I suppose, a scheduled increase from 11.5% to 12%, and that's effective 1 July as well. 

00:05:12 

Pleasing as well. 

00:05:12 

Yeah. 

00:05:13 

On the topic of contributions, the government co-contribution thresholds are increasing. 

00:05:18 

So the lower income threshold is moving from $45,400 to $47,488. 

00:05:25 

Okay. 

00:05:26 

and the upper income threshold shifting from $60,400 to $62,488. 

00:05:33 

Okay. 

00:05:33 

Great. 

00:05:34 

The transfer balance cap has shifted again from 1 July, the transfer balance cap will increase from $1.9 million to $2 million, and that's in line, of course, with the total super balance limit. 

00:05:44 

Yes. 

00:05:45 

Yeah. 

00:05:45 

So I should say as well, the defined benefit income cap has increased with that, and that's gone from $118,750 to $125,000. 

00:05:56 

Awesome. 

00:05:56 

Nice round numbers there. 

00:05:58 

Yeah, that's it. 

00:05:59 

That's right. 

00:05:59 

I like that. 

00:06:00 

And so that defined benefit income cap, that's for members that are receiving lifetime pensions with AWS. 

00:06:05 

Yeah, correct. 

00:06:05 

Yeah, excellent. 

00:06:06 

Concessional and non-concessional caps remain the same. 

00:06:09 

However, the bring forward rule thresholds have changed to allow for the increase to the total super balance limit that I mentioned. 

00:06:16 

So really what that means is that no bring forward contributions can be made if your balance is greater than $2 million. 

00:06:21 

Yes. 

00:06:21 

Okay. 

00:06:22 

Just before I close off, so just I suppose a couple of important 

00:06:25 

things to note, members must use their ATO portal, so the Australian Taxation Office portal, linked with their MyGov account to see their own personal thresholds and limitations. 

00:06:35 

So just a tip there to log into your MyGov to get a sense of what your balance is, okay? 

00:06:39 

Yeah, good advice. 

00:06:40 

Yeah, that is. 

00:06:41 

All federal budget announcements, some of them we touched on today, they still need to be legislated and are therefore subject to change. 

00:06:48 

So just be mindful of that as well. 

00:06:49 

Oh, good point. 

00:06:50 

Great. 

00:06:51 

Michael, thank you so much for coming in today and sharing your insights. 

00:06:55 

I hope that we're going to speak to you again in the future. 

00:06:57 

Looking forward to it, guys. 

00:06:58 

Thank you. 

00:06:59 

Thanks, Michael. 

00:07:00 

So that wraps up today's episode of Exploring Super, the exclusive podcast for ESS Super members. 

00:07:05 

We look forward to producing more content for you at ESS Super, proudly serving our members. 

00:07:10 

If you'd like more information about our investment and products, please go to esssuper.com.au. 

00:07:19 

This podcast is of a general nature only and does not consider your personal circumstances, financial needs or objectives. 

00:07:25 

Before acting on any advice contained in this podcast, please download and read the relevant product disclosure statement and target market determination, found on our website, esssuper.com.au. 

00:07:36 

The Board recommends that you seek financial advice before acting upon this information. 

00:07:40 

Benefits in ESS Super's accumulation plan, income streams and beneficiary account products are not guaranteed or underwritten by the Victorian Government or ESS Super. 

00:07:49 

Content was up to date at time of recording and budget reforms do require passing of legislation to be in force. 

00:07:55 

For more details on the superannuation thresholds, please refer to the Australian Taxation Office website, www..ato.gov.au.