Federal Budget changes to superannuation you need to know

There were a number of changes to the superannuation rules following the recent budget announcement. The following is a summary of each change to superannuation. Most of these changes impact those planning for retirement as well as those first home buyers and those ineligible to receive superannuation due to casual work.

Change to the work test for voluntary contributions

Effective date: From 1 July, 2022.

Affected clients: Individuals aged 67 to 74 (inclusive).

Individuals aged 67 to 74 (inclusive) will be eligible to make, or receive, certain voluntary super contributions without the need to meet the work test. Eligible contributions will include non-concessional contributions (including bring-forward contributions), or salary sacrifice contributions, subject to existing contribution cap limits.
Individuals aged 67 to 74 (inclusive) will still have to meet the work test (or work test exemption) to make personal deductible contributions.

The Government has stated that removing the requirement to meet the work test under the above conditions will simplify the rules governing super contributions and will increase flexibility for older Australians to save for their retirement.

Reducing the Downsizer contribution eligibility

Effective date: From 1 July, 2022.

Affected clients: Individuals aged 60 plus.

The eligibility age to make a downsizer contribution into superannuation will be reduced from 65 to 60 years of age.

The downsizer contribution was first introduced from 1 July, 2018, allowing eligible individuals to make a one-off, post-tax contribution to super of up to $300,000 (per person) from the sale proceeds of their home. Downsizer contributions do not count toward an individual’s non-concessional contribution cap, and do not have a total superannuation balance eligibility criterion.

The Government has stated that this measure will allow more older Australians to consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families.

First home super saver scheme

Effective date: From 1 July, 2022.

Affected clients: Prospective first home buyers.

Under the existing First Home Super Saver Scheme (FHSSS), the maximum amount you can access of voluntary concessional and non-concessional contributions will be increased from $30,000 to $50,000.

There is no change to the existing eligible voluntary contribution limit of $15,000 per year. Eligible voluntary contributions (up to $15,000 per year) made from 1 July, 2017, will continue to count towards the total amount able to be released.

Remove the $450 per month threshold for superannuation guarantee eligibility

Effective date: From 1 July, 2022.

Affected clients: Low income and part time workers.

The current $450 per month minimum income threshold, under which employees do not have to be paid the SG by their employer, will be removed.

Expanding the SG coverage for lower income workers is intended to improve equality in the superannuation system.