Changes to Superannuation on 1 July 2022

Changes to superannuation legislation which commenced on 1 July 2022 could impact your super plans.

Work Test

Prior to 1 July 2022 individuals aged between67 and 74 who wanted to make a voluntary non-concessional (after tax) super contribution had to meet a work test or get a work test exemption. Under the new rules, any individual under 75 years of age can make or receive personal and salary sacrifice contributions without meeting a work test or needing an exemption, subject to existing caps. These caps are

       ·  Before tax contributions cap: $27,500

       ·  After tax contributions cap: $110,000

Downsizer Contribution

The age thresh-hold for the downsizer contribution has reduced from 65 to 60. This contribution enables people over 60 to sell their home and contribute up to$300,000 (per individual) to their super account. The downsizer contribution does not attract tax and does not count towards annual contribution caps.

Super Guarantee

The compulsory payment which must be made by Employers (Super Guarantee) increased from 10% to 10.5%; Also, the $450super guarantee threshold has been removed for employees aged 18 and over. Before 1 July 2022 Employers only needed to pay the super guarantee if workers were paid $450 or more (before tax) in a month. From 1 July 2022. This change is designed to assist low-income earners to increase their retirement savings.

First Home Buyers

The maximum amount that can be released under the First Home Super Saver Scheme has increased from $30,000 to $50,000.

Bring forward rule

Finally, individuals aged 67 to 74 on 1July of a financial year will be able to make non-concessional contributions using the bring-forward rule, to make after-tax contributions greater than the annual non-concessional contributions cap, subject to the contribution limits. This allows individuals in this age group to make contributions three times the current cap in one financial year.

For legal advice about the changes to the legislation please contact our Wills and Estates Team. For financial advice as these changes apply to you, we suggest you contact your superannuation fund or financial adviser.

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