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Up and coming super changes

Date: 25 November 2021

Recently, several significant super changes have been introduced into Parliament as a part of the government’s plan to enhance excellent outcomes for Australians. If passed, the changes will allow individuals aged 67-75 to make non-concessional contributions and salary sacrifice super contributions without meeting the work test. Other changes introduced in conjunction include:

  • Lowering the age for downsizer contributions.
  • Increasing the maximum releasable amount under the First Home Super Saver Scheme.
  • Removing the minimum threshold for super guarantee.

These changes will affect retirees, first home buyers, and low earning employees. Each of the changes is explained in the details below.

Changes to work test and bring-forward rule

Under the current law, individuals aged between 67-75 will either need to pass the work test or satisfy the work test exemption criteria to make non-concessional and salary sacrifice contributions. To pass the work test, an individual must work at least 40 hours during a consecutive 30 day period each income year. To meet the work test exemption criteria, an individual must have satisfied the work test in the income year preceding the year the contribution was made. They must also have a total super balance of less than $300,000 at the end of the previous income year and have not relied on the work test exemption in the last financial year.

The proposed amendments will allow individuals aged 67-75 to make non-concessional contributions and salary sacrifice super contributions without meeting the work test, subject to contribution caps. Following that, individuals under 75 years of age will also be able to access the bring forward non-concessional contributions in a particular financial year (provided eligibility conditions are met). The age limit to bring forward non-concessional donations is currently 67.

*Note that the work test or work test exemption would still need to be met under these proposed amendments if individuals between 67-75 want to claim a deduction for personal contributions.

Downsizer contributions age to be lowered

Downsizer contributions allow individuals aged 65 or over to contribute into their super of up to $300,000 from the proceeds of selling their home. With the introduction of amending legislation, the government seeks to reduce the age limit to over 60 of the downsizer contributions. It is expected to apply to downsizer contributions made on or after 1 July 2022, subject to all other eligibility conditions are being met.

Increase in maximum releasable amount for first home buyers

The First Home Super Saver Scheme was designed to help first home buyers save for a deposit by allowing them to make voluntary concessional and non-concessional contributions into super and later withdraw those eligible contributions and associated earnings for purchasing a home. Currently, the maximum amount released from super is $30,000. This maximum amount will increase to $50,000, which will apply from the day after the amending legislation receives Assent. 

*Note, however, that while the overall maximum amount will increase, the amount of voluntary contributions eligible to be released in any financial year does not change from $15,000.

Removing minimum threshold for super guarantee

Currently, an employer does not have to pay a super guarantee for one of their employees if they earn less than $450 in a calendar month with that employer. The $450 threshold was initially introduced as a way to minimise the administrative burden on employers. However, with the technological advancement of single touch payroll, the government no longer sees a need for the threshold, increasingly affecting young, lower-income, part-time, and female workers. Depending on when the legislation receives Assent, the entry will be removed from 1 July 2022 or after that date.

Want to plan for the future?

If you would like to take advantage of any upcoming changes, we can keep you up to date and put a plan in place for when they become law. Contact us today at our office or via email enquiries@rm.net.au for expert advice on these super changes or any other questions or issues you may have.

**The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

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