As of July 1, 2022, new rules will benefit retirees through contribution opportunities, tax breaks for home buyers, downsizers, and contribution opportunities for those earning less than $450 per month.
I cover some of the new and expanded contribution opportunities below.
Removal of the work test
Individuals aged 67-74 will have greater opportunity to contribute to super with the following changes:
- The removal of the work test for personal (after-tax) contributions and salary sacrifice contributions, and
- An increase to the amount of after-tax contributions that may be made within a single financial year.
Be aware however that the work test still applies if you make a personal contribution and wish to claim a tax deduction.
What are the opportunities?
Eligibility to make non-concessional (after-tax) contributions under the bring-forward rules will be extended for those aged 67 at the start of a financial year to those aged under 75 with the removal of the work test.
Whilst there are certain eligibility requirements such as the amount you already have in Superannuation assuming you meet these you could bring forward Non-Concessional Contributions from future years to make even larger contributions. This is known as the bring forward rule. If eligible you may be able to contribute up to $330,000 either in a single financial year, or over a three-year period.
Generally, those with a super balance of $1.7million or more are not eligible and you need to be under 75 at some time during the financial year you contribute.
This could make a big difference for those couples which have big differences in their super balances or those in receipt of inheritances.
The eligible age for downsizers to top up super with a $300,000 contribution from the sale of their home has been reduced to 60 from 65.
Apart from being over the age of 60 the downsizer contribution eligibility is not dependant on total super balance provided other criteria is met.
Such criteria being the house has been owned for 10 years or more and at some time was their primary residence and the contribution must be made within 90 days of settlement.
Access more to buy your first home
The First Home Super Saver Scheme (FHSSS) allows you to make voluntary contributions of up to $15,000 per year within your concessional and NCC caps and you can later withdraw an amount of those voluntary contributions plus earnings calculated at a set rate by the Australian Taxation Office. The maximum amount of voluntary contributions that you can withdraw increases from $30,000 to $50,000 from 1 July 2022, thus boosting the amount that can be accessed from super and directed to buying your first home.
More employees eligible for super from their employer
Superannuation Guarantee (SG) requires employers to pay a minimum level of super support for eligible employees. One criteria for an employee to be eligible is based on that employee’s monthly earnings being at least $450 per month. However this threshold is being abolished from 1 July 2022 allowing all eligible employees to receive SG paid into their super fund.
This article first appeared in the Autumn 2022 issue of Client Alert.
Disclaimer: The information contained in this article has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned in this article, consult your financial advisor to consider whether that is appropriate having regard to your personal objectives, financial situation and needs.