There are several changes to super legislation which may affect you in the new financial year, including:
- Superannuation Guarantee Set to Increase
- $450 Super Guarantee threshold to be abolished
- Increase to the releasable amount for the First Home Super Saver Scheme
- Reduction in age for Downsizer Contributions (from 65 to 60 years)
- Work Test abolished for retirees in the 67-74 age bracket
- Bring-Forward Rule Age Increase
Superannuation Guarantee Set to Increase
Under Superannuation Guarantee, employers must pay super contributions to eligible employees based on the current super guarantee rate at least every three months.
The Super Guarantee (SG) percentage is the minimum required by law. You may pay super at a higher rate under an award or agreement; however, if you don’t pay the required SG amount by the quarterly due date, you will have to pay a Super Guarantee Charge.
Currently, if you pay an employee $450 or more (before tax) in salary or wages in a calendar month, you must also pay a super guarantee to them.
Changes
As part of the 21/22 Federal Budget, the Government announced as of 1 July 2022 that the current $450 per month earning threshold will be removed. Meaning, that employers will have to start paying super to all eligible employees – regardless of how much they are paid.
The current Super Guarantee rate is 10.0% but from July 2022 will rise to 10.5% and then increase by 0.5% increments every year until it reaches 12.0% in July 2025.
Employer – Next Steps
You will need to review your employment contracts and update your payroll settings to ensure the superannuation guarantee payment is increased appropriately.
MYOB Clients – will need to review super rates manually. Click here for step by step instructions.
Xero Clients – Xero handles superannuation guarantee contribution rate increases and updates them for you. However, if you have manually changed the % in the past, it may not automatically change. For instructions on how to adjust manually, Click Here
Quickbook Clients – Quickbook will automatically update all super rates within the system that are currently set at the default rate each time it increases. However, if you have manually changed the % in the past, it may not automatically change. For instructions on how to adjust manually, Click Here
Super Guarantee Percentage Rates
| Period | General Super Guarantee (%) |
| 1 July 2002 – 30 June 2013 | 9.00 |
| 1 July 2013 – 30 June 2014 | 9.25 |
| 1 July 2014 – 30 June 2021 | 9.50 |
| 1 July 2021 – 30 June 2022 | 10.00 |
| 1 July 2022 – 30 June 2023 | 10.50 |
| 1 July 2023 – 30 June 2024 | 11.00 |
| 1 July 2024 – 30 June 2025 | 11.50 |
| 1 July 2025 – 30 June 2026 and onwards | 12.00 |
Source: ATO
Other Super Changes that may affect you…
The First Home Super Saver Scheme
The First Home Super Saver Scheme is designed to encourage first home buyers to save for a deposit by making super contributions with the ability to later withdraw the funds to purchase their first home (and gain access to a 30% tax offset).
From 1 July 2022, eligible voluntary contributions to be released under the scheme will increase to $50,000 (previously $30,000). The increase is being introduced to keep pace with the rise in housing prices and required deposits.
The maximum amount of super contributions that can be counted for release will remain at $15,000 for each financial year, and, all amounts released must be applied to the single ‘first home’ purchase.
Downsizer Contributions Scheme – Minimum Age Reducing from 65 to 60
The Downsizer Contributions Scheme is designed to encourage mature homeowners to sell their primary residence increasing their retirement savings and making more homes available for younger families.
The scheme currently allows people aged 65 and older to make a non-concessional (post-tax) superannuation contribution of up to $300,000 from the proceeds of selling their home.
A downsizer contribution does not count towards any of the contribution caps, nor does it affect the total superannuation balance of the member’s fund until it is re-calculated at the end of the financial year.
From 1 July 2022, the eligibility age for downsizing contributions will be reduced from 65 to 60 years.
Some of the eligibility criteria you must satisfy are:
- The home must be in Australia, have been owned by you or your spouse for at least 10 years, and the disposal must be exempt or partially exempt from capital gains tax (CGT).
- You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home.
- Prior to (or at the same time) making your contribution, you must provide your fund with the ‘Downsizer contributions into super form’.
- The contribution to super must be made within 90 days of settlement of the sale.
The Work Test for Retirees
Currently, Super funds can only accept voluntary contributions made by a member within the 67 to 74 age bracket if that member has been “gainfully employed” for a minimum of 40 hours over a consecutive 30-day period during a finical year.
From 1 July 2022, the work test for this age bracket will be abolished for both member contributions and employer non-mandated contributions. Contributions from 1 July 2022 can also be tax-deductible for individuals aged 18 to 66 without having to meet the work test.
However, the work test will be preserved should you wish to claim a tax deduction for a contribution made on or after 1 July 2022.
This change increases the ability of older Australians to make contributions to their superannuation. In particular, this amendment will allow retirees who may have accumulated savings outside of super to take advantage of the modern super system.
‘Bring-forward’ rule age limit will increase to 75
The bring-forward rule allows you to make up to three years worth of non-concessional (after-tax) contributions to your super in a single income year.
Meaning, that you can put up to $330,000 – or three times the current $110,000 annual non-concessional contributions cap – into your super in one financial year without paying additional tax. (Your personal NCC cap may be different, depending on the amount you have in super).
As of 1 July 2022, the bring-forward age eligibility will increase from under 65 years to under 75 years.
We are always happy to help.
If you require any additional information, please do not hesitate to contact the team at [email protected] or call (02) 4365 6789.
