Making Super Even More Super!!!
The Australian Government Budget in May 2021 proposed changes to superannuation and these were finally passed by both houses of parliament on February 10, 2022.
From July 1, 2022, the main changes include:
Removing the monthly income threshold
The $450 monthly income threshold to receive employer contributions under the superannuation guarantee rules will be removed. From July 1, 2022, employers will need to pay superannuation guarantee (SG) contributions for low-income earners, being those that earn less than $450 per month.
Removing the work test
The work test will be removed for those aged 67 to 74 for voluntary contributions.
From July 1, 2022, individuals aged 67 to 74 will no longer have to meet the work test to make non-concessional contributions. The opportunity will exist to transfer UK pension monies (regarded as non concessional contributions) right up to a person’s 75th birthday. Given corresponding changes to the “Bring forward” rule (see below), this opens up a great opportunity for retired expatriates to review their UK pensions, especially where these monies were previously “stranded” as they had stopped working and were over the age of 67.
If an individual wants to make a member taxable contribution for those aged 67 to 74, they will need to continue to meet the work test. The work test is working 40 hours for remuneration over a consecutive 30-day period, at least once during the year.
Changing the bring forward non-concessional contribution rule
For those aged 67 to 74, the bring forward non-concessional contribution rule will be introduced in line with those under the age of 67.
From July 1, 2022, individuals aged under 75 (up from age 67) will have now have an option to contribute up to $330,000 over a three-year period, depending on their total superannuation balance (TSB).
The TSB rule is as follows for 2021-22 onwards:
Total superannuation balance
NCC and bring forward $
$330,000 over 3 years
> $1,480,000 and < $1,590,000
$220,000 over 2 years
> $1,590,000 < $1,700,000
$110,000 over 1 year
Lowering age eligibility for downsizer contributions
The downsizer contributions age eligibility will be lowered from age 65 to age 60.
A downsizer contribution allows eligible members to make a once-off member contribution of $300,000 to their superannuation fund following the disposal of their principal place of residence.
This contribution does not count towards a member’s non-concessional contribution cap.
Do you have questions about superannuation and UK Pension transfers?
Superannuation can be complex to navigate, and rules are changing frequently.
If you have any questions about how the superannuation contribution changes relate to you, please contact us on 0151 346 5460 or by email at firstname.lastname@example.org Dave Stone
Managing Director - Alexander Beard (Australia) (PTY) Ltd.