Superannuation is constantly changing and with an approaching election, it’s likely there will be more changes to come, no matter who wins. The current changes we do know, however affect employers, employees, and self-funded retirees.
Employees and Employers
There are significant changes for employers and employees as follows:
From 1 July 2022, all employees will receive the compulsory super guarantee no matter they earn. This is due to the removal of the $450 month threshold, that operated for years.
The Super Guarantee Rate will increase from 10% to 10.5% from 1 July 2022
Personal super concessional contributions (Tax deductible Contributions) will remain at $27,500 per person.
Personal super Non concessional contributions (tax free contributions) will remain at $110,000.
First home Super Saver Scheme is increased from $30,000 to $50,000 per person.
If you are a employer you will need to factor in the increase in the compulsory superannuation for the 2022-23 financial year. You may also need to look at your payroll software, to make changes for employees earning under $450 per month. You also need to ensure that your super contributions are paid on time, or you may not be entitled to a tax deduction for the late payment of super. Late payment of super is also a time-consuming administrative process, as SG forms need to be lodged and other costs incurred.
For self-funded retirees the following changes will be in place from 1 July 2022:
The work test is removed for Retirees aged between 67-74 for non concessional contributions. This means that you are able to contribute $110,000 to your fund with no requirement to satisfy the work test.
However, if you wish to make personal concessional contributions to super (Tax deductible contributions) you must satisfy the work test. This remains at 40 hours work in a 30-day period during the year of contribution.
The 50% reduction in the minimum pension drawdown is extended to 30 June 2022
The downsizer contribution eligibility age is reduced to 60 years of age. This means if you sell your home, you may be able to contribute $300,000 (600,000 per couple) of the proceeds to super without affecting your other contribution limits.
The above changes are welcome news for self-funded retirees, especially the pension draw down minimum during these uncertain times.
If you have any queries on the above changes, please contact us. We also recommend that if you intend to make any large contributions or changes to your super you consult us before the change.
This article was written by Peter Gill and appeared in our April 2022 newsletter.