Last week the Government passed, The Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021.
The Bill aims to improve flexibility for individuals preparing for retirement, increase superannuation support for individuals earning less than $450 per month and provide assistance for first home buyers.
A summary of the changes are outlined below:
1. Removal of the work test requirements
The age-based work test requires an individual to be gainfully employed for at least 40 hours in any period of 30 consecutive days, during the income year.
From 1 July 2022, the work test will be removed for individuals between 67 and 75 years who contribute non-concessional contributions and salary sacrifice contributions. The work test will still apply to personal concessional contributions for those individuals.
This measure also allows such individuals to make non-concessional superannuation contributions under the brought-forward rule. This means that individuals aged 67 to 74 years (inclusive) who were not previously able to bring forward non-concessional contributions due to their age may do so, starting 1 July 2022.
2. Reducing the eligibility age for downsizer contributions from 65 to 60 years
Currently if you are 65 years or older, you may be eligible to contribute up to $300,000 from the proceeds of the sale of your home into your superannuation fund.
From 1 July 2022, individuals aged 60 and above will be permitted to access the downsizer contribution measures.
For further information on the downsizer rules please refer to our previous article.
3. Choice in the exempt current pension income methods
Superannuation trustees will be able to choose their preferred method of calculating exempt current pension income when they have member interests in both accumulation and retirement phases at one time.
These amendments will minimise complexity of superannuation calculations and associated costs.
4. Removal of the $450 per month income threshold for employer superannuation guarantee support
Currently employers are required to pay superannuation guarantee only to employees who earn over $450 in salary or wages in a calendar month.
This Bill amends the Superannuation Guarantee Administration Act to remove the $450 a month threshold.
Removing the threshold from 1 July 2022 will expand the coverage of the Superannuation Guarantee to eligible employees earning salary or wages less than $450 in a calendar month from a single employer.
5. Increasing the maximum releasable amount for the First Home Super Saver Scheme
The maximum amount of voluntary contributions an individual can release under the First Home Super Saver Scheme will increase from $30,000 to $50,000 from 1 July 2022.
This amendment ensures that the First Home Super Saver Scheme continues to help first home buyers save faster for the purpose of purchasing or constructing their first home.
Working with clients
The introduction of these changes will present significant planning opportunities to grow your superannuation. If you wish to discuss further, please contact us.
