Changes to superannuation rules from July 1, 2022
February 15, 2022
The May 2021 Budget proposed changes to superannuation were passed by both houses of parliament on February 10, 2022.
These are very important rule changes that apply from July 1, 2022. The changes await Royal Assent.
From July 1, 2022, the main changes include:
Removing the monthly income threshold
The $450 monthly income threshold to receive employer contributions under the superannuation guarantee rules will be removed.
Note: From July 1, 2022, employers will need to pay superannuation guarantee (SG) contributions for low-income earners, being those that earn less than $450 per month.
Removing the work test
The work test will be removed for those aged 67 to 74 for voluntary (member) contributions.
From July 1, 2022, individuals aged 67 to 74 will no longer have to meet the work test to make member non-concessional contributions (NCC).
If an individual wants to make a member taxable contribution for those aged 67 to 74, they will need to continue to meet the work test.
The work test is working 40 hours for remuneration over a 30-day period, at least once during the year.
Note: This will allow (from July 1, 2022) members to even up member balances between spouses and also allow estate planning strategies to be considered in relation to the taxed element that makes up member balances (for those aged 67 to 74 that no longer work).
Increasing the bring forward non-concessional contribution rule
For those aged 67 to 74, the bring forward non-concessional contribution rule will be increased.
The non-concessional contribution cap is $110,000 for the 2021-22 year. The 2020-21 NCC cap was $100,000.
For the 2021-22 year, members aged under 67 have an option to contribute up to $330,000 over a three-year period, depending on their total superannuation balance (TSB).
From July 1, 2022, members aged under 75 (up from age 67) will have now have an option to contribute up to $330,000 over a three-year period, depending on their total superannuation balance (TSB).
The TSB rule is as follows for 2021-22 onwards:
|Total superannuation balance||NCC and bring forward $|
|< $1,480,000||$330,000 over 3 years|
|> $1,480,000 and < $1,590,000||$220,000 over 2 years|
|> $1,590,000 < $1,700,000||$110,000 over 1 year|
|> $1,700,000||$0 (nil)|
Lowering age eligibility for downsizer contributions
The downsizer contributions age eligibility will be lowered from age 65 to age 60.
A downsizer contribution allows eligible members to make a once-off member contribution of $300,000 to their superannuation fund following the disposal of their principal place of residence.
This contribution does not count towards a member’s non-concessional contribution cap.
Do you have questions about your superannuation?
Superannuation can be complex to navigate, and rules are changing frequently.
If you have any questions about how the superannuation contribution changes relate to you, please contact LDB’s superannuation specialists by phoning (03) 9875 2900 or filling out the contact form below.