Earlier this year, several proposed amendments to superannuation, including removing the “work test” for older Australians, passed through parliament.
What that means is that from July 1, 2022, people all the way up to age 75 can make fairly significant voluntary super contributions without needing to meet the work test requirements.
Watch the video below to learn more about what the benefits of this change will be, or read on.
DISCLAIMER – The information provided in this blog is general and does not consider your individual financial needs or objectives. It does not constitute personal advice. We recommend seeking out professional and independent financial, legal and tax advice which has been designed for your individual situation before acting on any information contained below.
Superannuation Work Test Changes
Prior to July 1, 2022, Australians between 67 and 74 had to meet work test requirements, which included working at least working at least 40 hours over a 30-day period, if they wanted to make voluntary concessional and non-concessional contributions to their super.
However, the work test is being scrapped for voluntary non-concessional contributions from July 1, 2022. Read more about the changes to the work test here.
Australians in this age group may also be able to access the bring forward rule from this date.
Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and increase flexibility for older Australians to save for their retirement through superannuation.Australian Taxation Office
Important note: Those wanting to claim a personal superannuation contribution tax deduction will still be required to meet the work test after July 1,2022.
What Work Test Changes in 2022 mean?
Before the changes to the work test were made, we had to tell people they had to go back to work in order to contribute to their superannuation. But from July 1, 2022, Australians aged up to 75 will be able to make substantial voluntary super contributions without needing to work.
Here are some examples of how the changes will benefit older Australians:
- Retired people who sell a property or receive an inheritance after they’ve finished working, and they wish to add the proceeds to their superannuation. This might simplify their investments and reduce the tax on their investment earnings if the money is within a tax-free pension.
- They may also be able to trigger the bring-forward rule and contribute $330,000 instead of $110,000.
- Retirees might consider making a recontribution strategy where they withdrawal their superannuation and then recontribute it, so it increases the tax-free component which will minimise tax when left to non-dependent beneficiaries after their passing.
- Older Australians who receive money into their super may be able to start an account-based pension.
Retirement Planning Advice Brisbane
Would you like to learn more about the changes to the work test, superannuation contributions or retirement planning?
Our Certified Financial Planner® in Brisbane is ready to assist! Call 1300 200 012 today or send us a message here.
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