There were significant changes implemented across the superannuation landscape on 1 July 2022. It’s worth understanding these changes and what they mean for you and your superannuation.
1. Work test removal (conditions apply)
The work test requirement was abolished, and older Australians no longer need to meet the work test in order to make superannuation contributions.
What this change means for superannuation members
Removing the work test requirement simplifies the rules around superannuation contributions and increases flexibility for Australians to save for retirement.
This change means that fund members under the age of 75 will be able to make or receive personal contributions and salary sacrificed contributions without meeting the work test requirement, subject to existing contribution cap limits.
However, it is worth noting that members aged between 67 to 74 will still need to meet the work test if they wish to claim a personal superannuation deduction for their contribution. For these members, there will be no changes to the way they need to lodge their notice of intent to claim or vary a personal super contribution deduction.
The only change is that the Australian Taxation Office (ATO) will be checking to see if these members meet the work test when they lodge their tax return.
2. Extension of temporary reduction in superannuation minimum drawdown rates
The 50 per cent temporary drawdown reduction was first introduced in 2020 as part of the government’s response to COVID-19. It has now been extended further to the 2022-23 financial year, starting from 1 July 2022 until 30 June 2023.
There are no changes or actions needed from those who have previously opted to receive the reduced minimum pension drawdown. They will continue to receive the reduced payment amount into the new financial year.
Pensioners who wish to opt in to receive the reduced payment, or who want to revert to their default payment or a specified payment amount, should contact their pension provider for further details.
3. Super Guarantee (SG) rate rise
The SG rate increased from 10 per cent to 10.5 per cent. This means that employers must now use this new rate to calculate how much super to pay to their employees. This new rate is applicable to all super paid on or after 1 July 2022, even if some or all of the pay period is for work done prior to the date.
The SG rate is legislated to rise incrementally to 12 per cent by 2025.
4. Super Guarantee (SG) threshold removal
The SG eligibility threshold of $450 per month was removed. This means that employers are now required to make SG contributions to all eligible employees regardless of how much they earn.
5. First home super saver (FHSS) scheme
The first home super saver (FHSS) scheme allows Australians to save money for their first home inside their super fund. Under the scheme, fund members can apply to release a maximum of $15,000 of their voluntary contributions from any one financial year.
Previously, fund members were able to release up to $30,000 in eligible super contributions, plus associated earnings, across all years. As of 1 July 2022, this limit will be increased to $50,000.
It’s worth noting that the eligible contributions that count towards your FHSS maximum releasable amount for each financial year will remain at $15,000.
6. Downsizer contribution update – what you need to know
The minimum age for people eligible for the downsizer scheme has now reduced from 65 to 60.
This means that homeowners (either spouse) aged 60 or above can contribute up to $300,000 to their superannuation from the sale of their homes.
Who is eligible?
Besides the eligibility age, there are other criteria you must meet in order to qualify for the downsizer scheme. These are as follows:
- You have owned the home (in your name or your spouse’s name) for at least 10 years prior to the sale.
- The home is in Australia and isn’t a caravan, houseboat, or other mobile home.
- The proceeds from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT asset.
- You provide your super fund with a ‘Downsizer contribution into super’ form, either before or when you make the contribution.
- You make the contribution within 90 days of receiving the proceeds of the sale.
- You have not previously made a downsizer contribution to your super.
Please note, if the home sold was only under your spouse’s name, you may also make a downsizer contribution, or have one made on your behalf, if you meet the above requirements. This means you and your partner could potentially contribute up to $600,000 to your super account.
Need more information?
If you need help understanding these changes to superannuation and how they affect you, speak to your financial adviser or refer to the following articles on the ATO website:
This article was previously prepared and published by AIA Australia Limited ABN 79 004 837 861 (AIA Australia) prior to Resolution Life’s acquisition of AIA Australia’s Superannuation & Investment life insurance business on 1 July 2023.
There were significant changes implemented across the superannuation landscape on 1 July 2022. It’s worth understanding these changes and what they mean for you and your superannuation.
1. Work test removal (conditions apply)
The work test requirement was abolished, and older Australians no longer need to meet the work test in order to make superannuation contributions.
What this change means for superannuation members
Removing the work test requirement simplifies the rules around superannuation contributions and increases flexibility for Australians to save for retirement.
This change means that fund members under the age of 75 will be able to make or receive personal contributions and salary sacrificed contributions without meeting the work test requirement, subject to existing contribution cap limits.
However, it is worth noting that members aged between 67 to 74 will still need to meet the work test if they wish to claim a personal superannuation deduction for their contribution. For these members, there will be no changes to the way they need to lodge their notice of intent to claim or vary a personal super contribution deduction.
The only change is that the Australian Taxation Office (ATO) will be checking to see if these members meet the work test when they lodge their tax return.
2. Extension of temporary reduction in superannuation minimum drawdown rates
The 50 per cent temporary drawdown reduction was first introduced in 2020 as part of the government’s response to COVID-19. It has now been extended further to the 2022-23 financial year, starting from 1 July 2022 until 30 June 2023.
There are no changes or actions needed from those who have previously opted to receive the reduced minimum pension drawdown. They will continue to receive the reduced payment amount into the new financial year.
Pensioners who wish to opt in to receive the reduced payment, or who want to revert to their default payment or a specified payment amount, should contact their pension provider for further details.
3. Super Guarantee (SG) rate rise
The SG rate increased from 10 per cent to 10.5 per cent. This means that employers must now use this new rate to calculate how much super to pay to their employees. This new rate is applicable to all super paid on or after 1 July 2022, even if some or all of the pay period is for work done prior to the date.
The SG rate is legislated to rise incrementally to 12 per cent by 2025.
4. Super Guarantee (SG) threshold removal
The SG eligibility threshold of $450 per month was removed. This means that employers are now required to make SG contributions to all eligible employees regardless of how much they earn.
5. First home super saver (FHSS) scheme
The first home super saver (FHSS) scheme allows Australians to save money for their first home inside their super fund. Under the scheme, fund members can apply to release a maximum of $15,000 of their voluntary contributions from any one financial year.
Previously, fund members were able to release up to $30,000 in eligible super contributions, plus associated earnings, across all years. As of 1 July 2022, this limit will be increased to $50,000.
It’s worth noting that the eligible contributions that count towards your FHSS maximum releasable amount for each financial year will remain at $15,000.
6. Downsizer contribution update – what you need to know
The minimum age for people eligible for the downsizer scheme has now reduced from 65 to 60.
This means that homeowners (either spouse) aged 60 or above can contribute up to $300,000 to their superannuation from the sale of their homes.
Who is eligible?
Besides the eligibility age, there are other criteria you must meet in order to qualify for the downsizer scheme. These are as follows:
Please note, if the home sold was only under your spouse’s name, you may also make a downsizer contribution, or have one made on your behalf, if you meet the above requirements. This means you and your partner could potentially contribute up to $600,000 to your super account.
Need more information?
If you need help understanding these changes to superannuation and how they affect you, speak to your financial adviser or refer to the following articles on the ATO website:
This article was previously prepared and published by AIA Australia Limited ABN 79 004 837 861 (AIA Australia) prior to Resolution Life’s acquisition of AIA Australia’s Superannuation & Investment life insurance business on 1 July 2023.