Upcoming Superannuation changes – 1st July 2022
Flagged in the Federal Government’s 2021 Budget, changes to superannuation have passed the Senate and are awaiting Royal Assent. But what changes are ahead?
Due to come into effect 1st July 2022, the changes are set to benefit superannuation fund members in a few key ways:
The Superannuation Guarantee is legislated to increase to 10.5% from the current 10%, significantly increasing contributions being made on behalf of employees and boosting long-term retirement outcomes.
Home Equity Access Scheme
From 1st July 2022, as a retiree, you may be able to secure a government loan using the equity in any property you own. Currently, payments are only available fortnightly, however if you meet the eligibility criteria you may be able to access up to two lump sum payments under the pension loan scheme, totalling up to 50% of the maximum age pension.
Repealing the work test
Currently if you are aged 67 to 74 (inclusive) and wish to continue contributing to your superannuation you must satisfy the ‘work test’. According to the ATO, this means you needed to be gainfully employed for at least 40 hours during a consecutive 30-day period in the financial year in which the contributions are made. This ‘work test’ will be scrapped from 1st July 2022, allowing individuals to make non-concessional contributions and salary sacrifice contributions to superannuation without meeting the prior criteria. For example, a 74 year old could utilise the ‘bring forward’ rule and make a non-concessional contribution of up to $330,000.
Reducing the eligibility age for downsizer contributions
From 1st July 2022, the minimum age that you can make a downsizer contribution will fall from 65 to 60 years of age.
Under the downsizer contribution rules, an individual can make a one-off after tax contribution to superannuation up to $300,000 per person from the proceeds of selling their home they have owned for at least 10 years. It will not count towards their concessional or non-concessional cap so using the ‘bring forward’ rule, an individual could contribute $330,000 plus the downsizer contribution of $300,000 totalling $630,000 or $1,260,000 per couple.
Providing SMSFs choice to calculate exempt current pension income
This will simplify the calculation involving unsegregated and segregated assets when there is accumulation and retirement money in the same fund. This is typically managed by the administrator (accountant) of the fund.
Removing the $450 per month minimum Superannuation Guarantee threshold
Currently, if you are aged 18+ you need to earn $450 or more in a calendar month to be eligible for the employer contribution, however that is about to change.
From 1st July 2022, employers will now be required to pay superannuation guarantee contributions on behalf of low-income employees’ earnings which will benefit an estimated 300,000 people.
Increasing the first home super saver scheme
Individuals can make voluntary concessional and non-concessional contributions to superannuation and have them released to help pay for their first home. The releasable amount has been increased to $50,000 but only $15,000 per financial year, hence, you would need to contribute over 4 years to take full advantage of the scheme.
Beyond Advisors offers professional advice for businesses of all shapes and sizes. For any help or assistance on the changes to superannuation, you can get in touch with our helpful team today.