The Bill implementing the majority of the super changes proposed in the 2021-22 Federal Budget has passed both houses of Parliament and awaits royal assent.
The Bill contains the following measures from 1 July 2022:
- changes to work test conditions
- extension of non-concessional bring-forward rule for people aged 67 to 74
- reduced eligibility age for downsizer contributions from age 65 to 60
- removal of $450 per month threshold for super guarantee
Remove work test requirement
Currently, a member aged 67 to 74 must satisfy a work test (or qualify for a work test exemption) to make voluntary super contributions (excluding downsizer contributions).
The Government proposed, in the May 2021 Federal Budget, removing the work test (or work test exemption) requirement for non-concessional contributions and salary sacrifice contributions from 1 July 2022.
This means that members no longer need to meet the ‘work test’ to be able to contribute to super in after-tax dollars (and salary sacrifice), up until age 74.
However, from 1 July 2022, the work test (or work test exemption) will still apply to personal tax-deductible contributions where a member is aged 67 to 74.
Extend NCC bring forward rule to clients under age 75
Currently, a member must be under age 67 at the start of a financial year in order to trigger the non-concessional contributions cap bring-forward rule in that year.
From 1 July 2022, the maximum age for the bring-forward rule will increase so that a member can trigger the bring-forward rule in a financial year where they are under age 75 at the start of the year.
This means that up to $330,000 can be contributed to super in after-tax dollars in one financial year and/or over a three year period – up until age 75.
Reduce minimum age to make a downsizer super contribution to 60
From 1 July 2022, the minimum age to make a downsizer contribution (measured at the time of contribution) will reduce from 65 to 60. This will allow some members aged 60 to 64 to potentially contribute $630,000 (or $1.26 million combined in the case of a couple) at one time to super by combining a downsizer contribution with the three year non-concessional contributions bring-forward rule.
Remove SG $450 income threshold
Currently, where an employee earns less than $450 in a calendar month, their employer is not required to pay superannuation guarantee (SG) on those earnings.
For SG quarters commencing 1 July 2022, this minimum SG threshold will be abolished and an employer will be required to pay SG on earnings less than $450 in a calendar month.
Source: Colonial First State, FirstTech Newsflash, 11 February 2022
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