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MYEFO contains previously announced and additional proposals

Article published on: 13-12-2023

The Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) was released on 13 December 2023. Many of the measures included in the outlook have been previously announced, as well as some additional proposals.

Key new announcements

Penalty units will increase to $330 (from $313) with a proposed commencement date of four weeks after legislation has passed. Last year, the Government legislated the increase in penalty units to $275, which was subsequently indexed on 1 July 2023. Penalty units are applied to a number of infringements, such as breaches of legislation by trustees of self-managed superannuation funds or failure of company directors to obtain a Direction Identification Number.
The rate of capital gains withholding tax for foreign residents will increase from 12.5% to 15%. The threshold that this withholding tax applies reduces from $750,000 to $0. This will apply to contracts entered from 1 January 2025 for the disposal of real property.
A tax deduction will no longer be available for the General Interest Charge and Shortfall Interest Charge incurred where tax debts are not paid on time and a tax liability has been incorrectly assessed resulting in tax being underpaid. This applies to all entities including individuals and companies. This will apply from 1 July 2025.
Reciprocal superannuation portability arrangements with the Cook Islands will be introduced, which will enable the transfer from Australian superannuation funds to the Cook Islands National Superannuation Fund. The proposed commencement date is 1 July 2025.

Previously announced measures

The victims and survivors of child sexual abuse will be able to seek access to an offender’s superannuation relating to eligible contributions as part of the payment of a court order for compensation that remains unpaid after 12 months. The ATO will identify eligible contributions relating to personal and salary sacrifice contributions, but excludes defined benefit interests and mandatory employer contributions. The payment to the victim will not be subject to tax. The measure is proposed to apply to contributions made from 1 July 2002. Additional changes will be made to ensure offenders cannot use bankruptcy provisions to avoid compensation orders. The Government previously released a consultation paper on this proposal on 19 January 2023.
Funding will be provided to allow the Government to meet commitments relating to aged care. This includes the Aged Care Quality and Safety Commission for oversight of the regulatory reform, as well as focus on a new Aged Care Act from 1 July 2024.
A staged rollout of the Support at Home Program will commence on 1 July 2025. This program will replace Home Care Packages and Short-Term Restorative Care Packages. The current Commonwealth Home Support Programme will transition to the new program from 1 July 2027.
On 26 October 2023, the Government announced it would amend the legislation to change the transfer balance cap (TBC) assessment for capped defined benefit income streams (CDBIS) where the pension is moved due to a successor fund transfer (SFT). The amendment is designed to remove unintended consequences of the reassessment of CDBIS under these circumstances. The amendment is to ensure that the original assessment of those income streams for TBC purposes is unchanged. This will apply retrospectively from 1 July 2017.
Minor amendments to the Division 296 tax (additional 15% on earnings associated with superannuation balances greater than $3 million) will exclude earnings from:
- constitutionally protected funds of State higher level office holders including State Judges, and
- Judges Pension Scheme interests of sitting Federal judges who are appointed prior to 1 July 2025 whilst they hold that office.
As announced in the Delivering Better Financial Outcomes Package, the Government will provide a clear legal basis for superannuation trustees to pay advice fees to an adviser from that individual’s superannuation interest. For superannuation fund trustees, the deductibility of those fees will be clarified with effective date from 1 July 2019.
The Paid Parental Leave (PPL) Scheme will be expanded. From 1 July 2023, the Parental Leave Pay (PLP) and Dad and Partner Pay are combining into one payment. Under the new rules, PLP will be 20 weeks (100 days) in the 2023/24 financial year and will extend by a further two weeks each year until it reaches 26 weeks (130 days) from the 2026/27 financial year.
The increase in the maximum Work Bonus balance from $7,800 to $11,800 will be permanent from 1 January 2024. In addition, from 1 January 2024, new recipients of the Age Pension, Disability Support Pension or Carers Payment who are at least Age Pension age and certain veterans’ entitlement recipients will receive a one-off Work Bonus income bank credit of $4,000. An additional income bank credit will be received by some individuals who were previously eligible recipients, lost entitlement to their payment and become eligible again.
From 1 July 2024, the ‘employment nil rate period’ will double from 12 weeks to 24 weeks and access will be expanded to those who enter full time employment. This will apply to recipients of JobSeeker Payment, Youth Allowance, Austudy, Parenting Payment, Age Pension, Disability Support Pension and Carer Payment.

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