Last month we welcomed the long-awaited passing of the legislation from the 2021 Federal Budget on contribution changes which will apply from 1 July 2022. Here is a recap of the Budget announcements now passed:
Removal of work test for salary sacrifice and non-concessional contributions
Currently the work test is required to be met for individuals aged between 67 to 74 years to make salary sacrifice, personal concessional and non-concessional contributions. To meet the work test, you must be gainfully employed for at least 40 hours during a consecutive 30-day period in the financial year in which the contributions are made.
From 1 July 2022, the work test will be removed for everyone under aged 75 so they will be able to make salary sacrifice and non-concessional contributions regardless of their employment status.
However, for personal (ie. deductible) concessional contributions by individuals aged 67 to 74 years, the work test still applies.
Increase in the non-concessional bring-forward rule for those up to age 75
The age limit to bring forward 3 years of non-concessional contribution caps has been increased from age 67 to 75 subject to their Total Super Balance the preceding 30 June.
|Total Super Balance as at 30 June 2022||Non-concessional contribution |
cap & bring forward available starting from 1 July 2022
|Less than $1.48 million||3 years ($330,000)|
|Greater than or equal to $1.48 and less than $1.59 million||2 years ($220,000)|
|Greater than or equal to $1.59 and less than $1.7 million||1 year ($110,000)|
|Greater than or equal to $1.7 million||Nil|
If an individual is turning 75 they can still trigger their 3 year bring forward non-concessional cap (provided they had not previously done so) and make their non-concessional contributions no later than 28 days after their 75th birthday.
Reduction in eligibility age for downsizer contributions
Downsizer contributions allows eligible individuals to make a one-off after tax contribution of up to $300,000 following the disposal of their principal place of residence into superannuation with the benefit of them non counting toward their non-concessional cap.
The criteria for these contributions have reduced to those over age 60 from 1 July 2022 as opposed to age 65 or older now.
Removal of the $450 per month Superannuation Guarantee
Currently, employers do not have to pay Superannuation Guarantee (SG) contributions to employees that earn $450 or less per month.
From 1 July 2022, employers will be required to make SG to their eligible employee’s super fund regardless of how much the employee is paid.
First Home Super Saver Scheme
The first home super saver (FHSS) scheme allows individuals to save money for their first home by making voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions into their super fund. Then provided they meet the eligibility criteria, they can apply to release their voluntary contributions, along with associated earnings, to help purchase their first home.
Currently the maximum amount that can be released is $15,000 in one financial year up to a maximum of $30,000 across all years.
From 1 July 2022, the maximum releasable amount across all years will increase from $30,000 to $50,000 with the annual maximum remaining unchanged at $15,000.
If you have any queries in relation to the above, don’t hesitate to discuss with your client manager.
Kreston Stanley Williamson Team
Author – Anna Wong
*Correct as of 31 March 2022
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.