Get ready for super changes from 1 July 2022
Concessional Contributions:
The Concessional Contributions cap is $27,500 for the 2022 financial year. This includes Superannuation Guarantee contributions, Salary Sacrifice Contributions and personal deductible contributions made to a members superannuation account. It is important that where members wish to claim their superannuation contributions personally they ensure they do the following:
- Ensure they make the payment early enough so it is received by their superannuation fund by 30 June.
- Complete a Notice of Intent to claim and send it to their superannuation fund.
- Ensure they receive acknowledgement that the Notice of Intent has been received. This must be received prior to the due date for lodgement of the Individual’s Income Tax Return for the year they wish to claim the deduction.
It is important for members to also bear in mind their carry forward concessional contributions cap which allows members with a balance of under $500,000 to carry forward any unused caps for up to 5 years and claim a larger deduction in the year they wish to utilise their unused cap.
Non Concessional Contributions:
The Non Concessional Contributions cap is $110,000 for the 2022 Financial Year. Members who are eligible can also utilise the bring forward provisions and contribute up to 3 years’ worth of Non Concessional contributions ($330,000).
Eligibility to make Non Concessional contributions requires two tests to be satisfied in the current year.
- The work test must be satisfied. This test requires all members aged between 67 and 74 to demonstrate that they have been gainfully employed for 40 hours or more in any 30-day period in a financial year in order to contribute.
- A member’s Total Superannuation Balance must be under $1.7 million. No Non Concessional contributions can be made where a member’s balance is $1.7 million or more. Access to the bring forward provisions is also dependent on what a member’s balance is at 1 July each year.
Downsizer Contributions:
Since 1 July 2018, those who are 65 or older have been able to make a Non-Concessional contribution into their superannuation account of up to $300,000 from the proceeds on the sale of their family home provided they owned the home for 10 years and meets the test for the main residence exemption. This contribution can be made outside of the usual conditions and caps associated with other Non-Concessional Contributions such as Total Superannuation Balance restricting non concessional contributions for members with balances over $1.7 million. In order to utilise this contribution the seller of the home must make the payment to their superannuation fund and complete the appropriate forms within 90 days of settlement of the property.
From 1 July 2022 the age requirement will also be reduced to 60 years and older allowing a greater number of people to take advantage of this measure.
Changes to Superannuation from 1 July 2022:
A number of changes affecting superannuation have been enacted in previous budgets but only take effect from 1 July 2022. Taxpayers and business should be aware of these to ensure that they comply with these from the new financial year.
Removal of work test:
The work test which requires all members aged between 67 and 74 to demonstrate that they have been gainfully employed for 40 hours or more in any 30-day period in a financial year in order to contribute has been removed effective 1 July 2022 for those who wish to make Non Concessional Contributions (subject to other conditions for making Non Concessional Contributions).
For those wishing to make personal contributions who are aged between 67-74, they will continue to be required to meet the work test in order to claim a deduction for the contribution.
Change to Superannuation Guarantee Rate:
The current Superannuation Guarantee Rate of 10% increases to 10.5% from 1 July 2022. The rate is scheduled to increase each year until it reaches 12% from 1 July 2025.
Removal of minimum income threshold:
The $450 minimum monthly earnings threshold has been removed effective 1 July 2022. Therefore employers will need to ensure that they pay all their employees Superannuation regardless of how much they earn per month.