UPCOMING CHANGES TO SUPER

TAKING EFFECT FROM 1ST JULY, 2022

 
The Treasury Law Amendments Bill was introduced into parliament near the end of 2021 by the government. This bill aimed to improve the outcomes of superannuation for Australians as well as the investment of Australian businesses. This is intended to improve the flexibility of superfunds’ retirement planning by changing the contribution rules. These changes are set to take effect from July 1, 2022.

Here are the new additions:

  1. Elimination of the $450 super contribution threshold : Employers will be required to begin paying Super Guarantee (SG) on the wages of employees who are 18 years old or older and earn $450 or more per month. To be eligible if you are under the age of 18, you must earn at least $450 per month before taxes and work at least 30 hours per week, unless you are covered by a workplace agreement that states otherwise.
  2. Increase in the SG contribution rate: The Super Guarantee (SG) contribution rate will rise from 10% to 10.5 % from July 1, 2022. The SG’s legislated increase to 12 % by 2025 was maintained in the Federal Budget 21-22. This means that the SG contribution rate will rise by 0.5% per year until it reaches 12% in 2025.
  3. Elimination of the work test for retirees: According to the current criteria, people aged over 67 years of age but not over 75 years of age have to satisfy the work test (or qualify for an exemption) to top up their super. The work test will be phased out from July 1, 2022, and the contribution ceiling will increase from $1.6 million to $1.7 million. 
  4. Expansion of the Downsizer Scheme: The Downsizer Scheme allows eligible people who are selling their home to make a one-time $300,000 contribution to their super that is not subject to concessional or other rules. The eligibility age for this scheme will be reduced from 65 to 60 from July 1st.
  5. Expansion of the First Home Super Saver SchemePeople investing in their first home can use the First Home Super Saver Scheme (FHSSS), which takes advantage of the favourable tax treatment of super contributions and earnings. This method of saving is preferred since it is quicker than saving outside of a super fund. The maximum withdrawal from this scheme will increase from $30,000 to $50,000 from July 1, 2022.
  6. Raising the age limit for the bring-forward rule: The bring-forward rule allows you to bring forward non-concessional contribution caps from previous years and use them in a shorter period of time, either all at once or in multiple larger contributions. The qualifying age will climb from under 67 to under 75 from July 1st.

For more information and tips about Australian accounting, financial planning, mortgage, and SMSF – go through our website: ncscorp.com.au.