Last month, we celebrated the long-awaited passage of legislation from the 2021 Federal Budget on contribution changes that will take effect from 1 July 2022. Here’s a recap of the Budget announcements, which may interest those seeking superannuation advice.
Removal of the work test for salary sacrifice and non-concessional contributions
The work test must be met for individuals aged between 67 to 74 years to make salary sacrifices and 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 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 sacrifices and non-concessional contributions regardless of their employment status.
However, the work test still applies for personal (ie. deductible) concessional contributions by individuals aged 67 to 74 years.
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 the eligibility age for downsizer contributions
Downsizer contributions allow 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 been reduced to those over age 60 from 1 July 2022 as opposed to age 65 or older.
Removal of the $450 per month Superannuation Guarantee
Currently, employers do not have to pay Superannuation Guarantee (SG) contributions to employees earning $450 or less monthly.
From 1 July 2022, employers must 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 and associated earnings to help purchase their first home.
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 at $15,000.
If you have any queries in relation to the above, don’t hesitate to reach out and contact us.
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.
