The Federal Budget 2021-22 delivered on 11 May 2021 included changes to superannuation. In particular, changes to superannuation will be of interest for retirees, or those close to retiring as well as employees who earn below the superannuation guarantee threshold.
The major Federal Government announcements for super last week included a few key measures:
- Repealing the work test for those aged 67 to 74;
- Extending access to the downsizer contributions scheme; and
- Abolishing the $450 a month minimum threshold for superannuation contributions.
The work test requires a person to be gainfully employed, being working at least 40 hours in a period of not more than 30 consecutive days in order for superannuation funds to accept non-concessional contributions from them (being contributions outside of the superannuation guarantee or self-employed contributions).
The government has announced that it will repeal the work test in full and its repeal will allow persons aged between 67-74 to be able to make non-concessional contributions to superannuation without being required to meet the work test.
The downsizer contributions scheme allows superannuation members to contribute up to $300,000 from the sale of a family home in which they have lived for the last 10 years. This contribution is able to be made where contribution caps have already been reached, including the transfer balance cap.
Previously, the only persons able to take advantage of this concession were those aged 65 or over. The budget announcement will reduce the minimum age to gain access from 65 to 60 from 1 July 2022.
There are some downsides to this scheme for persons taking advantage of the Age Pension assets test, and if you are considering contributing to super through the downsizer scheme you should seek advice.
Superannuation Guarantee Threshold Changes
In a welcoming move, the government has announced that the minimum threshold of $450 per month minimum to be earned in order to attract the superannuation guarantee will be abolished. With the casualisation of the workforce, the minimum threshold was identified as being an impediment to employees obtaining superannuation payments, especially those employees who are contributing to the economy in other ways, such as parenting.
When will these changes take effect?
The budget announced that these changes will likely take effect from 1 July 2022 in the financial year after the assenting legislation is introduced.
If you would like to discuss your self-managed superannuation fund or how these changes may affect you, please contact us.