1 July super changes
1 July 2022 will see a number of changes to super rules. Here’s an overview of the changes and what they mean to you.
The Superannuation Guarantee (SG) is increasing to 10.5%
The SG contribution rate will increase to 10.5%. This means that all Australian workers (eligible for SG) will be paid 10.5% of their wage or salary as a super contribution. As an employee you do not need to do anything – your employer is responsible for paying the increased rate from 1 July 2022.
The SG threshold of $450 per month will be removed
This means all eligible working Australians over the age of 18 will be entitled to employer SG contributions regardless of how much they earn. This measure will help low-income earners better save for retirement. If you are under 18, the income threshold still applies.
First Home Super Saver Scheme maximum withdrawal amount increases from $30,000 to $50,000
The First Home Super Saver Scheme (FHSSS) allows first home buyers to save for a deposit using their super account. From 1 July 2022, an individual can contribute up to $15,000 each financial year, capped at $50,000. If two people are buying the same property, they can access $50,000 each.
When you’re ready to purchase a home, simply apply to the ATO to request release of your FHSSS savings amount – which is made up of contributions and earnings – and you’re good to go.
You’ll find more information of the FHSSS here.
Downsizer contribution eligibility age moves from 65 to 60
The eligible age to make a downsizer contribution (from the proceeds of selling your home) will be reduced from 65 to 60.
The downsizer superannuation contribution provides an opportunity for eligible older Australians to sell their home and contribute some or all the proceeds to their super.
As an individual, you can contribute up to $300,000 or $600,000 as a couple, if you’re both eligible. The advantage of a downsizer contribution is that you don’t pay tax on the contribution, and it doesn’t count towards your annual contribution caps.
You’ll find more information about the downsizer rules here.
Changes to work test rules for older members wishing to make super contributions
At present older members (aged 67-74) who want to contribute to super, need to meet a work test. From 1 July 2022, if you are aged under 75, you will no longer need to meet the work test, or apply for the work test exemption, to make voluntary contributions to your super.
However, individuals aged 67-74 will still need to meet the work test to make personal deductible contributions – that is, contributions for which you claim a tax deduction.
For more information, visit the ATO.
Members aged 67-74 are now able to make non-concessional contributions under the bring-forward rule
If you make contributions above the annual non-concessional contributions cap, you may be eligible to gain access to future year caps. This is known as the bring-forward arrangement. It allows you to make extra non-concessional contributions without having to pay extra tax.
Eligibility for the bring-forward arrangement depends on your age and your total super balance on 30 June of the previous financial year.
If you are eligible, you can bring-forward up to three years’ worth of the cap (that is, make contributions three times the current cap) in one financial year.
Most recently, if you were aged between 67-74, you could only use this provision if you met the work test. From 1 July 2022, members aged 67-74 on 1 July of a financial year will be able to use the bring-forward rule to make after-tax non-concessional contributions three times the annual non-concessional contributions cap, subject to contribution limits.
If you are 75 years or older, your super fund may only be able to accept employer contributions and downsizer contributions.
You’ll find more information about the bring-forward rule here.Book an appointment