The Budget’s Proposed Changes to Super
This year’s Federal Budget proposals will allow greater flexibility in making superannuation contributions from 1 July 2022. This article look’s at a couple of the proposed changes – the abolition of the work test and reducing the qualifying age for the downsizer contribution.
Repealing the work test for super contributions from 1 July 2022
A work test currently applies to anyone aged between 67 to 74 wanting to make personal super contributions. The work test requires a person to work at least 40 hours over 30 consecutive days in a financial year to be eligible to make personal contributions to super. This work test also applies to salary sacrifice contributions.
The government has recently proposed to abolish the work test, from 1 July 2022, for personal super contributions, salary sacrifice contributions and spouse contributions for anyone aged between 67 and 74 years old. However, the work test will still apply to anyone claiming a tax deduction for personal super contributions.
Abolishing the work test will provide greater flexibility, including:
- moving non-super assets, such as cash, listed shares and managed funds, to an eligible super fund as non-concessional contributions;
- transferring inheritances as non-concessional super contributions before reaching age of 75; and
- enabling couples to rebalance their superannuation to make the most of their Total Super Balance Cap and Transfer Balance Cap.
Reducing the qualifying age for the downsizer contribution
The downsizer contribution allows a one-off, non-concessional contribution to be made to super from the proceeds of selling your main residence. A downsizer contribution is capped at $300,000 per person, meaning couples can contribute up to a total of $600,000 to super. Downsizer contributions do not count towards the non-concessional contribution cap.
From 1 July 2022, the government has proposed the qualifying age for the downsizer contribution be reduced from age 65 to age 60.
If you would like further information about these changes, please call our office on (07) 5492 0350. One of our financial advisors will be happy to assist you.
Please note the above changes are proposals only and have not yet been passed by legislation.
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
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