Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 508

What the Federal Budget means for you

This year’s Federal Budget is expected to return to a small surplus of $4 billion for 2022-2023, the first time that the Budget has been in the black for 15 years. But the Budget is forecast to return to deficit in 2023-2024.

Key spending measures, many announced prior to Tuesday night, include:

  • $14.6 billion in cost-of-living support over four years including:

i) $3.5 billion for Medicare over five years to improve access to bulk billing by tripling the incentive payment to GPs.

ii) $3 billion in one-off energy bill relief (split 50:50 with the states) for five million low-to-middle income households and one million small businesses. Households will receive $500 rebates, while small businesses will get $650 rebates.

iii) $1.9 billion to help single parents. They’ll receive increased welfare support until their children turn 14 as well as increased payments.

iv) $4.9 billion over five years for increased Jobseeker payments. The higher Jobseeker rate of $745.20 a fortnight, previously only available to those 60 and over, will be extended to include people 55 and over.

v) Renters will get an additional $2.7 billion via a rise in the maximum payment rates of Commonwealth Rent Assistance of 15%.

  • More support for the aged care sector, principally through a 15% pay rise for workers that will cost $14.1 billion over four years.
  • Measures to help housing affordability, such as broader access to the Home Guarantee Schemes and tax changes to boost build-to-rent housing.
  • $2 billion for the hydrogen industry and incentives for developers to build more environmentally friendly homes.

Budget saving initiatives include:

  • $9.1 billion over the next five years by cracking down on those avoiding GST and personal income tax.
  • Changes to the Petroleum Resource Rent Tax to raise $2.4 billion over four years.
  • A 5% hike to the tobacco excise, bringing in an additional $3.3 billion.
  • Increasing the payment frequency of super.
  • Slowing NDIS growth from 13.8% per annum to 8%.

Below, AMP's Shane Oliver compares the Government's economic assumptions to his own forecasts.

On superannuation, there are two important highlights:

  • It came as no surprise that the Government confirmed it would increase the tax on earnings for superannuation balances exceeding $3 billion. Yet as Firstlinks’ contributor Meg Heffron notes, the Budget indicates that the Government won’t be changing how it calculates the tax:

“… we had hoped the Government might adjust the method used to calculate the tax (to avoid a current criticism that the proposed method effectively taxes unrealized gains), might index the $3 million threshold or might allow those who exceed it to withdraw some of their super even if they hadn’t reached the age where this would normally be allowed. It seems that won’t be happening.”

  • The Government provided an update on proposed amendments to the non-arm’s length expenditure (NALE) rules. It will limit the income of SMSFs and small super funds that are taxable as NALI to 2x the general expense. Fund income taxable as NALI will also exclude contributions. The changes could result in higher tax bills for SMSFs and SMSF trustees. For further details, go here:

For more on the Budget, please see updates from two of our sponsors below.

nabtrade

nabtrade's Gemma Dale breaks down the Budget and what it means for you, with a focus on:

  • Taxation
  • Superannuation
  • Families
  • Cost of living measures

Click here to watch the video or read the full commentary.

Heffron

The 2023 Federal Budget was about cost of living pressures, health and housing, so not surprisingly, superannuation didn’t rate much of a mention. Meg's summary is here.

 

James Gruber is an Assistant Editor at Firstlinks and Morningstar.com.au

 

7 Comments
Denial
May 17, 2023

"Unrealised gains"

The bigger impact of flawed policy decisions is the complexity and costs it then imposes on all stakeholders involved, included government agencies. It's farcical the ALP really don't learn from their historic mistakes with executing key policy and understand this basic principle!! It will impact small business owners who will be asset rich and cash poor. They won't be able to fund the tax assessments when it artificially goes up based on some arbitrary valuation.



June
May 15, 2023

What a distinction! We will be the only country in the world that taxes unrealised capital gains, other than one Nordic country I believe that is also looking at it.....not mention the CGT again on the asset when you eventually sell it. If our SMSF ends up being in the >$3 mil cohort per member at some point we might be thinking seriously of just getting out of equities given the up and down fluctuations which we are prepared to weather in normal circumstances.

Peter J
May 12, 2023

The debate around increasing Jobkeeper is a perfect reason for indexing the TSB of $3 million at which excess tax is applied. Chalmers admitted the lack of indexation was important so that more people will be affected over time. The TBC is indexed and the $3 million limit should be too.

Mark
May 11, 2023

Regarding Superannuation changes ATO website says subject to legislation and TBA so nothing set in stone yet apart from the TSB limit of $3M so changes can hopefully still come about before it comes into play

Former Treasury policy maker
May 11, 2023

Doubt it Mark. All that means is that the legislation hasn't been written yet. But you can be sure that drafting is advanced and it will give effect to the announced government policy. Unless the government has invited feedback with a view to changing policy, the Parliament will be presented with Bills that make the announced changes.

Mark
May 11, 2023

The Government did invite submissions on the proposal though.

Former Treasury policy maker
May 11, 2023

I suppose it's theoretically possible, but the closing date was 17 April so Ive always just taken that as a standard pre-Budget process. If they were at all persuaded by those submissions they'd have said something about them in the Budget. To me, the Budget effectively confirms the policy as announced. Specifically on indexation of the $3mn they were clear that they wouldn't introduce anything automatic but leave it up to future parliaments to decide if that amount had become inappropriate.
I hope you are right but as someone who's been part of Treasury's process in the past I just don't think there's scope for further changes now. Seems none of the submissions convinced them. Doesn't surprise me as they really don't care if some folk decide to get money over $3mn out of super. That would be mission accomplished.

 

Leave a Comment:

RELATED ARTICLES

Chalmers' disingenuous budget claims

Budget cash splash will do more harm than good

Let 'er rip: how high can debt-to-GDP ratios soar?

banner

Most viewed in recent weeks

Maybe it’s time to consider taxing the family home

Australia could unlock smarter investment and greater equity by reforming housing tax concessions. Rethinking exemptions on the family home could benefit most Australians, especially renters and owners of modest homes.

Supercharging the ‘4% rule’ to ensure a richer retirement

The creator of the 4% rule for retirement withdrawals, Bill Bengen, has written a new book outlining fresh strategies to outlive your money, including holding fewer stocks in early retirement before increasing allocations.

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Are franking credits worth pursuing?

Are franking credits factored into share prices? The data suggests they're probably not, and there are certain types of stocks that offer higher franking credits as well as the prospect for higher returns.

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Latest Updates

A nation of landlords and fund managers

Super and housing dwarf every other asset class in Australia, and they’ve both become too big to fail. Can they continue to grow at current rates, and if so, what are the implications for the economy, work and markets?

Economy

The hidden property empire of Australia’s politicians

With rising home prices and falling affordability, political leaders preach reform. But asset disclosures show many are heavily invested in property - raising doubts about whose interests housing policy really protects.

Retirement

Retiring debt-free may not be the best strategy

Retiring with debt may have advantages. Maintaining a mortgage on the family home can provide a line of credit in retirement for flexibility, extra income, and a DIY reverse mortgage strategy.

Shares

Why the ASX is losing Its best companies

The ASX is shrinking not by accident, but by design. A governance model that rewards detachment over ownership is driving capital into private hands and weakening public markets.

Investment strategies

3 reasons the party in big tech stocks may be over

The AI boom has sparked investor euphoria, but under the surface, US big tech is showing cracks - slowing growth, surging capex, and fading dominance signal it's time to question conventional tech optimism.

Investment strategies

Resilience is the new alpha

Trade is now a strategic weapon, reshaping the investment landscape. In this environment, resilient companies - those capable of absorbing shocks and defending margins - are best positioned to outperform.

Shares

The DNA of long-term compounding machines

The next generation of wealth creation is likely to emerge from founder influenced firms that combine scalable models with long-term alignment. Four signs can alert investors to these companies before the crowds.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.