Spotlight on Upcoming Superannuation Changes

Several legislative changes proposed in the May 2021 Federal Budget have finally been passed and will come into effect from 1 July 2022.

Staying up to date will ensure you maximise the benefits Superannuation can provide as part of your overall wealth management strategy.

There are benefits for first home buyers intending to use their superannuation as a savings vehicle for their house deposit, and greater opportunities to contribute for those nearing retirement.

If you would like further information on how the changes may impact you, please contact your trusted adviser.

An outline of the legislative changes are below:

  • The removal of the $450 minimum income threshold for Superannuation Guarantee Contributions for employees earning salary or wages.
  • An increase to the maximum amount of voluntary contributions made to super that can be released under the First Home Super Saver Scheme (FHSSS) from $30,000 to $50,000.
  • Extending the eligibility to make a downsizer contribution to those aged 60 and over (previously only available to those aged 65 and over).
  • Extending eligibility to make Non-Concessional Contributions (NCCs) under the bring-forward rule available to individuals aged 74 and under at the beginning of the financial year; and
  • Removal of the work-test requirement for NCCs and salary sacrifice contributions, for individuals aged between 67 – 75.

First Home Super Saver Scheme – Increased release amount

  • Until 30 June 2022, up to $30,000 of voluntary super contributions can be released (along with associated earnings) to assist with the deposit of a first home. From this date, the amount will increase to $50,000 plus associated earnings.
  • The limit on contributions that can be made annually remains the same.

Things to Note:

  • While this change increases the total amount that can be invested for a first home purchase in the superannuation environment, the annual limit on contributions has not changed from $15,000 per annum.
  • This may result in a longer savings period especially for those who have most of their concessional contributions cap utilised by SG contributions.

Extension of downsizer contributions to age 60

From 1 July 2022, the downsizer contribution will be available to individuals aged 60 or over, this was previously only available to individuals aged 65 or older at the time of the contribution.

Things to Note:

  • Contributions are required to be made within 90 days of settlement. Eligibility is based on the person’s age at the time of the contribution.

Changes to bring-forward Non-Concessional Contribution (NCC) Eligibility

Individuals aged less than 75 as of 1 July of the prior year will be eligible to access the NCC bring forward arrangement, subject to meeting all relevant eligibility criteria.

Things to Note:

  • Subject to meeting the eligibility criteria (including super balance and previous contributions) an individual is able to utilise the full bring forward amount with no decreased amounts subject to age restrictions.
  • Contributions need to be received by the super fund no later than 28 days after the person turns 75. If a person turns 75 in June the contribution will need to be made in that month as the bring-forward rule will not be available in July, the following financial year.
  • This change would only apply to those with balances under $1.7m.

Removal of the work test

The work test will no longer need to be met by individuals aged between 67 and 75 when making:

  • Salary sacrifice contributions; and
  • Personal non-concessional contributions.

Things to Note:

  • The work test will still need to be met (or an exemption applied) to claim a tax deduction for personal concessional contributions.
  • Contributions will need to be received no later than 28 days after the person turns 75.
  • This will also apply to the following types of contributions:

– Spouse contributions

– Small business CGT Cap

  • Existing contribution caps still apply.

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