Five superannuation changes effective 1 July 2022
In this year's Federal Budget, the Morrison Government announced its proposal to extend the 50% reduction to minimum pension drawdown requirements into the 2023 financial year.
While the announcement remains a proposal only, we take this opportunity to outline five superannuation changes which were announced in the 2021 Federal Budget and have recently received Royal Assent to come into effect from 1 July 2022.
1) REMOVING THE $450 THRESHOLD FOR SUPER CONTRIBUTIONS
The $450 monthly earnings threshold for superannuation contributions will be removed on 1 July 2022. Under the change, employers will be required to pay the superannuation guarantee on the wages of employees’ earning less than $450 per month.
If you are under the age of 18, unless you are covered by a workplace agreement that states otherwise, you need to work more than 30 hours in a week.
2) SUPERANNUATION GUARANTEE INCREASE
Superannuation Guarantee for employees will increase from 10% to 10.5%.
3) CHANGES TO THE WORK TEST REQUIREMENTS FOR SUPERANNUATION CONTRIBUTIONS
The work test will be abolished on 1 July 2022. Under the change, retirees aged between 67 and 74 can top up their super without having to satisfy any test provided their super is less than $1.7 million in July 2022.
However, those aged 67 to 74 will need to meet the work test if they wish to claim a personal superannuation deduction for their contribution.
4) EXPANDING THE DOWNSIZER SCHEME
The eligibility age for the Downsizer Scheme will be lowered from 65 to 60 years on 1 July 2022. The Downsizer Scheme allows eligible people who sell their home to make a one-off, $300,000 contribution to their super, not limited by any other. Couples can contribute $300,000 each.
5) EXPANSION OF THE FIRST HOME SUPER SAVER SCHEME
The maximum withdrawal from the First Home Super Saver Scheme will increase from $30,000 to $50,000.
The amendment does not alter the limit on the amount of voluntary contributions from any one financial year that are eligible to be released (being $15,000).
That is, the maximum amount of voluntary contributions that are eligible to be released are $15,000 per financial year and $50,000 in total.