Numerous superannuation changes proposed for 2022 have passed through parliament.
In this blog we outline four (4) superannuation rule amendments which are due to come into effect on July 1 and will be favourable for thousands of Australians and their hip pockets.
Precision Wealth’s Certified Financial Planner®, Glenn Hilber shares more details in the video and article below:
4 Superannuation Changes Coming into Effect in 2022
As a result, there are multiple changes set to benefit members of Australian super funds.
- Increase to withdrawal limit for First Home Super Saver Scheme
The First Home Super Saver Scheme allows Australians to salary-sacrifice or make super contributions which they can withdraw to use as a deposit for their first home.
Previously the maximum amount of voluntary contributions made over multiple financial years eligible to be released was $30,000, but this amendment will see the withdrawal limit increase to $50,000.
This means two people in a couple can have $50,000 released from each of their super funds ($100,000 in total) and will be able to gather a fairly large home deposit tax-effectively using this scheme.
And even though skyrocketing property prices have made property ownership unattainable for many, this increase should help some people enter the property market.
IMPORTANT NOTE: You can ONLY withdraw any additional contributions you have made through salary sacrifice or non-concessional contributions. You cannot withdraw your existing balance if it’s only comprised of employer contributions.
Also, the $50,000 worth of additional contributions which can be withdrawn have to be made to your super over a few financial years, as additional contributions are capped at $15,000 per year.
- Age threshold decreased for downsizer contribution
At the moment people aged 65 and above may be eligible to make a contribution into their super fund of up to $300,000 if they sell their principal residence that they’ve owned for more than 10 years. This is known as the downsizer contribution.
From July 1, the age for eligible Australians able to access this scheme is set to drop from 65 to 60.
This will help Australians over 60 to boost their superannuation, particularly those selling a very expensive principal residence who are looking to downsize to a cheaper unit or move away from the city.
- Work test abolished for non-concessional super contributions up to the age of 75
This means people between the ages of 67 and 75 who are not working can now make non-concessional super contributions where they previously couldn’t.
According to the ATO, Non-concessional contributions include:
- personal contributions made by the member for which no income tax deduction is claimed – this is the most common type of non-concessional contribution
- excess concessional contributions for the financial year which the member does not elect to remove from the superfund after we send them an excess contributions determination will also count towards your member’s non-concessional contributions cap.”
This amendment may be particularly beneficial for retirees in that age bracket who have some money outside of super, as this is going to allow them to contribute money into super later in life and potentially start an account-based pension.
- Super guarantee for those who earn less than $450-a-month
Previously, if you earned less than $450 a month, your employer was not required to pay superannuation guarantee on that money, but this is set to change from 1 July 2022.
After this point, everyone will be entitled to the superannuation guarantee no matter how little they earn.
So, this will be a boost for part-time casual workers (it might be mums returning to the workforce from having children) as they will receive super contributions.
Here’s how it will work:
Somebody earning less than $450 was not entitled to superannuation, but under this change they will be eligible for the super guarantee, which is 10% of what they earn. So, potentially they could receive up to $45 a month in superannuation.
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