On the July 1st, 2022, various changes to superannuation contributions will come into effect. These changes could benefit many individuals particularly retirees. We’ve provided a summary of the key changes below.
Super guarantee $450 income threshold removed.
If you are a low-income worker or have multiple part time jobs, you now have the opportunity to grow your super. The removal of the $450 income threshold means all employers are obligated to pay superannuation to all their employees regardless of how much they earn, except for employees under the age of 18 working less than 30 hours a week – workers in this category will not receive super contributions.
Work test requirements dismissed.
If you are an individual aged between 67 to 74 with a total super balance of less than $1.7 million, you are now able to make non concessional or salary sacrificed contributions into your super without meeting the work test. Despite this, if you want to claim a deduction on these contributions, you will still need to meet the work test. The work test definition showing that you must have worked for a minimum of 40 hours over a consecutive 30-day period during the financial year.
After-tax contribution under bring-forward rules extended.
The non-concessional contribution bring-forward rule currently only available if you are aged 67 or less has been extended to individuals who are aged under 75. All the other requirements remain unchanged with the maximum contributions shown below.
If the total super balance on June 30 of the previous year is:
• Less than $1.48 million, you have a three-year bring forward period and a contribution cap of $330,000
• Between $1.48 and $1.59 million, you have a two-year bring forward period and a contribution of $220,000
• Between $1.59 and $1.7 million, you cannot use the bring forward rule but have an annual contribution cap of $110,000
• Greater than $1.7 million, you are not eligible
First Home Super Saver scheme boost.
The First Home Super Saver scheme allows you to save money for your first home within your super fund. Originally the release of contributions for a first home purchase under this scheme was capped at $30,000, this will now be increased to $50,000 starting from 1st July 2022. Aside from this, the limit on annual contributions remains the same at $15,000.
Down sizer contribution eligibility reduced.
If you are a homeowner at the age of 60, you now have another option to grow your super. The down sizer contribution, currently eligible for individuals aged 65 or over has now been reduced to those aged 60. At the age of 60 you will be able to contribute up to $300,000 from the sale of your home into your super. All other eligibility criteria remain the same including the requirement that contributions are to be made within 90 days of receipts of the sale proceeds.
A choice to exempt current pension income (ECPI).
ECPI are income that a self-managed superannuation fund (SMSF) earns from assets held to support retirement-phase income streams. ECPI are exempt from income tax.
The new change in law now allows SMSF trustees to choose their preferred method of calculating ECPI. If you are a trustee, you will be able to choose whether to obtain an actuarial certificate to calculate the ECPI for the whole year or to use the actual income for the parts of the year that the fund held 100% in retirement pension accounts.
If you would like to know more about the super contribution changes and how they apply to your circumstances, feel free to contact our friendly team at Wilson & Assoc Chartered Accountants for assistance.
About Wilson & Assoc
Wilson & Assoc Chartered Accountants provides taxation and business advisory services to individuals, investors and businesses wherever you are based. We provide specialist services to startups and health care providers.
If we can help in any way, we’d like to hear from you.
Information provided on this website is general information only and should not be treated as professional advice. You may not rely on the basis of currency or accuracy of the information. We disclaim liability to all persons or organisations for any loss or damage suffered as a result of such reliance. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.