Work Test
From 1 July 2022, members under 75 years of age will be able to make personal non-concessional contributions and salary sacrificed contributions without meeting the work test, subject to existing contribution cap limits. They may also be able use the bring forward rule.
Fund Trustees will no longer have to administer the work test at the time they accept the contribution.
Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and increase flexibility for older Australians to save for their retirement through superannuation.
However, those aged 67 to 74 will need to meet the work test if they wish to claim a personal superannuation deduction for their contribution.
For those individuals there is no change to the way they lodge their notice of intent to claim or vary a personal super contribution deduction.
The only change is that now we will be checking to see if they meet the work test at the time, they lodge their income tax return.
In summary:
No longer applies to salary sacrifice and non-concessional contributions until a members 75th birthday (currently age 67)
Still applies to personal concessional contributionsfor which you want to claim a tax deduction from age 67 to 74 and must be paid on or before the day that is 28 days after the end of the month in which member turns 75
Bring Forward Rules
If you make contributions above the annual non-concessional contributions cap you may be eligible to automatically gain access to future year caps. This is known as the bring-forward arrangement. It allows you to make extra non-concessional contributions without having to pay extra tax.
Eligibility for the bring-forward arrangement depends on your:
age
total super balance on 30 June of the previous financial year.
Age
1 July 2008 – 30 June 2020
If you are under 65 years of age at any time in a financial year, you may be able to make non-concessional contributions of up to three times the annual non-concessional contributions cap in that financial year.
If you are 65 years old or older on 1 July, you cannot access the bring-forward arrangement in that financial year. You need to meet conditions for certain types of contributions to be accepted by your super fund, including satisfying the work test or work test exemption (from 1 July 2019).
1 July 2020 – 30 June 2022
If you are under 67 years of age at any time in a financial year, you may be able to make non-concessional contributions of up to three times the annual non-concessional contributions cap in that financial year.
If you are 67 years old or older on 1 July, you cannot access the bring-forward arrangement in that financial year. You need to meet conditions for certain types of contributions to be accepted by your super fund, including satisfying the work test or work test exemption.
If you are 67 years or older you need to meet conditions for certain types of contributions to be accepted by your super fund, including satisfying the work test or work test exemption.
If you are 75 years or older your fund may only be able to accept employer contributions and downsizer contributions.
1 July 2022 and later years
If you are under 75 years of age at any time in a financial year you may be able to make non-concessional contributions of up to three times the annual non-concessional cap in that financial year.
If you are 75 years or older your fund may only be able to accept employer contributions and downsizer contributions.
In summary:
Allow NCC bring forward ($330k) up until members 75th birthday – subject to TSB
Note: opportunity to use re-contribution strategy
Downsizer Contributions
If you have reached the eligible age, you may be able to contribute up to $300,000 from the proceeds of the sale (or part sale) of your home into your superannuation fund.
From 1 July 2022 the eligible age is 60 years old or older. Prior to this it is 65 years old or older.
Some of the eligibility criteria you must satisfy are:
The home must be in Australia, have been owned by you or your spouse for at least 10 years and the disposal must be exempt or partially exempt from capital gains tax (CGT).
You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home.
Prior to (or at the same time) as making your contribution you must provide your fund with the 'Downsizer contributions into super form'.
In summary:
From age 60
Each spouse can contribute $300k
Contribute NCC and bring forward first as downsizer not restricted to TSB cap
Removing the $450 per month threshold for super guarantee eligibility
On 11 May 2021, as part of the 2021–22 federal Budget, the Australian Government announced it will remove the $450 per month threshold to expand coverage of super guarantee to eligible employees regardless of their monthly pay.
The change is now law by the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2021 with royal assent on 22 February 2022.
From 1 July 2022, employers will be required to make super guarantee contributions to their eligible employee's super fund regardless of how much the employee is paid. Employees must still satisfy other super guarantee eligibility requirements.
In summary:
$450 pm income threshold removed re SGC payments
Other (existing)
Fund cannot accept non mandated contributions for members 75 and over
Fund can accept SGC at any age
SMSF can have 6 members – applicable 1 July 2021
If you have any questions please contact your Sullivan Dewing Client Manager.
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