In the 2021 Federal Budget a number of welcome super proposals were announced. There had been no action to implement these super measures until 10th February 2022 when the Treasury Laws Amendment (Enhancing Superannuation for Australians and Helping Australian Businesses Invest) Bill 2021 was passed by both Houses of Parliament and await Royal Assent from the Governor General.
The following measures that will apply from 1st July 2022 which you need to be aware of when planning for your financial future are explained below.
1) Reduced eligibility age for the downsizer super contribution.
Currently individuals aged 65 and above can make a downsizer contribution of up to $300,000 to their super fund from the proceeds of selling their home. There is no upper age limit on this opportunity which can be a windfall gain for those who are under superannuated for their retirement.
As from the 1st July 2022 eligibility for downsizer contributions will decrease from age 65 to age 60. The eligibility age is tested at the time the contribution is made to the super fund and not the date the home was sold. It is important to remember however that the contribution must be made within 90 days of receiving the proceeds of sale which is usually the date of settlement.
If you have sold your home or plan to sell your home and you are in the 60 to 65 age range or older, please consult your financial advisor if you wish to take advantage of this once in a life time opportunity to transfer wealth into your super fund.
2) Work test reforms relating to eligibility to make superannuation contributions.
This measure will take effect from 1st July 2022 and introduces a new provision in the Tax Act which will apply the ‘work test’ to individuals aged between 67 to 75 years who wish to claim a deduction for personal superannuation contributions.
In the past and up to 30 June 2022, persons in the age group from 67 to 74 wanting to top up their super had to satisfy a work test which required you to work 40 hours within 30 consecutive days in a year in order to make personal deductible contributions, salary sacrifice contributions through an employer or non-concessional contributions.
Under the proposed new rules no work test is required in order to make non-concessional and salary sacrificed contributions. However the work test will still need to be satisfied in order to make personal deductible contributions.
A further benefit that is not currently available allows persons aged 74 and prior to turning 75 to make non-concessional contributions of up to a total of $330,000 using the bring forward rule which allows for contributions up to $110,000 in the year prior to turning 75 plus $220,000 pulled forward from the subsequent two years.
If you are in this age category you should consult your accountant or financial adviser to ensure you satisfy the new requirements and contributions are made at the relevant time in order to be compliant.
3) Removal of the $450 per month minimum super guarantee threshold.
As from 1st July 2022 employees including casual staff who earn less than $450 per month from a single employer will be entitled to the 10% superannuation guarantee contribution. If you are in this category you should ensure your employer is aware of the change and that your entitlement is paid into your nominated super fund.
4) First home super saver scheme maximum releasable amount from your fund.
Since 1st July 2017 individuals have been able to make voluntary concessional contributions and non-concessional contributions into their super fund and subsequently have those funds released to help pay for their first home.
As from 1st July 2022 this maximum amount will be increased from $30,000 to $50,000. Under the new rules the maximum amount of voluntary contributions that will be eligible to be released will remain at $15,000 per financial year plus the amount of income earned in the fund relation to those contributions.
Couples wanting to buy their first home would be able to contribute a maximum amount of $100,000 but it would take a minimum of four years to accumulate that amount and bear in mind you cannot include employer super guarantee contributions.
The way housing prices are escalating at present it is understandable that many first home buyers will also need to be on good terms with the bank of Mum and Dad.
Disclaimer:
The content of this article is not intended to be relied upon as professional advice and should not be used as such. If you have any questions you should consult a registered tax agent.
Brian Spurrell B A, B Com, Dip Ed, FCPA, CTA, Registered Tax Agent.
Director, Personalised Taxation & Accounting Services Pty Ltd
PO Box 143 Warrandyte 3113 Ph: 0412 011 946
Web: www.ptasaccountants .com.au