Recently the Government passed The Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021.
Some of these changes provide significant opportunities to grow your superannuation.
The Bill implements most of the superannuation changes proposed in the 2021-22 Federal Budget as detailed below:
Changes to the work test requirements for those aged 67 to 74
The current work test rules require an individual aged 67 to 74 to be gainfully employed for at least 40 hours in a period of 30 consecutive days, during the income year.
From 1 July 2022, the work test will be removed for these individuals in relation to non-concessional (after tax) contributions and salary sacrifice contributions. The work test will continue to apply to personal concessional (deductible) contributions.
Please note that this change is just the first step. The second step requires the Super Regulations to be updated. The Treasurer has indicted that the Government intends to do this by the end of the current financial year.
Increasing access to the bring-forward rule from 67 to 74
The cut-off age for the bring-forward rule in relation to non-concessional contributions has been increased from 67 to 75.
From 1 July 2022 individuals who are under age 75 at the start of the financial year will be able to trigger the bring-forward rule, allowing them to make non-concessional contributions of up to $330,000 in one year.
The existing total super balance requirements that limit or remove access to the bring-forward rules continue to apply.
Lowering the age for downsizer contributions from 65 to 60
From 1 July 2022, the minimum age to make a downsizer contribution will reduce from 65 to 60. The maximum contribution, under these rules remains $300,000 per couple and all other rules remain the same.
The eligibility age is tested at the time the contribution is made to the super fund and not the time the house is sold (contract date).
Giving some SMSFs choice of Exempt Current Pension Income (ECPI) Method used
Superannuation funds, with periods solely in pension phase, for part of the year will be able to choose their preferred method to calculate ECPI. The choice is only available where no member has a total super balance over $1.6m at 30 June of the prior year.
Removal of the $450 monthly income threshold for employer superannuation guarantee support
Currently employers are required to pay superannuation guarantee (SG) only to employees who earn over $450 in salary or wages in a calendar month.
For SG quarters commencing 1 July 2022, the minimum SG threshold will be removed and an employer will also be required to pay SG on earnings less than $450 in a calendar month.
Increasing the maximum releasable amount for the First Home Super Saver Scheme
The maximum amount of voluntary contributions an individual can release under the First Home Super Saver Scheme will increase from $30,000 to $50,000 from 1 July 2022.
There is no change to the annual voluntary contribution limit, which will remain at $15,000. This means that contributions will need to be made over at least four years to take maximum advantage of the scheme.
If you’d like to discuss any of these changes, please contact us.
