From 1 July 2022, there will be changes made to super to make it easier for Australians to grow their retirement savings.
These include:
- Partially removing the work test for those aged 67 to 75.
- Extending the non-concessional contributions bring-forward age limit to age 75.
- Reducing the downsizer contribution eligibility age to age 60.
- Increasing the maximum First Home Super Saver Scheme withdrawal amount to $50,000.
- Removing the monthly minimum threshold for Superannuation Guarantee (SG) Contributions.
- Giving greater choice and flexibility to super fund trustees in choosing the taxation method (segregated or proportional) for their fund within a tax year.
Partially removing the work test for those aged 67 to 75
- From 1 July 2022, the existing work test will no longer be required for individuals aged 67 to 75 who make or receive voluntary super contributions. This includes salary sacrifice contributions, non-concessional contributions (NCCs), contributions made under the Small Business CGT concessions and personal injury/compensation/structured settlement contributions.
- The work test or recent retiree exemption will still be required for individuals in this age range who wish to claim a tax deduction for their personal contributions. From 1 July 2022, the work test can be met in any period in the financial year of the contribution i.e. having worked 40 hours within 30 consecutive days.
Extending the non-concessional contributions (NCCs) bring-forward age limit
- The bring forward age restriction will be extended to age 75.
- There is no tapering off and the full bring-forward non-concessional cap will be available up until age 75. This means that from 1 July 2022 onwards, a person’s last opportunity to trigger the NCCs bring-forward provisions is the financial year in which they turn age 75 (i.e. they are still age 74 on 1 July of the year).
- Existing restrictions on the full availability of bring forward contributions will continue to apply to individuals with Total Super Balance over $1.48 million (in 2022-23).
So that means you can make a super contribution of up to $330,000 in one year if you are aged 75 or younger instead of making $110,000 per financial year for 3 years. This can be used in addition to the downsizer super contribution detailed below.
Downsizer super contributions
- The downsizer super contribution age minimum will be reduced from age 65 to 60.
- There is no upper age limit.
- The $300,000 maximum downsizer contribution amount and other eligibility requirements will remain unchanged such as having a total super balance of less than $1.7M
First Home Super Saver (FHSS)
- The maximum amount that can be released under the First Home Super Saver Scheme (FHSS) is being increased to $50,000.
Continued superannuation pension payment minimum reduction
- The 50 percent reduction in minimum income payments will continue for the 2022/2023 financial year.
- Term allocated pension reductions will also be extended for any clients that request it for another 12 months until 30 June 2023.
If you’d like more information on how any of these changes may impact you personally please contact a Prudentia Financial Planning adviser – click here.