Who can claim Fuel Tax credits?

You may be eligible to claim fuel tax credits for fuel purchased for use in your business. To be eligible you must:

  • Be registered for GST
  • Use the fuel for an eligible activity including but not limited to:
    • Use in heavy vehicles travelling on public roads if the vehicle has a gross vehicle mass (GVM) greater than 4.5 tonnes.
    • Use in business activities such as agriculture, forestry, mining, construction and manufacturing if the vehicle (including light vehicles) was travelling on private roads and off public roads.

Further details regarding eligible fuels and business activities can be found on the ATO website.

Indexation of rates:

The rates for fuel tax credits are indexed bi-annually on 1 February and 1 August in line with the Consumer Price Index (CPI).

The indexed rates for the period from 2 August 2021 to 31 January 2022 are as follows:

  • Increase from 16.5 to 16.9 cents per litre for liquid fuels used in a heavy vehicle on public roads;
  • Increase from 42.7 to 43.3 cents per litre for liquid fuels in all other business uses;
  • Increase from 18.305 to 18.565 cents per litre for E85 (85% ethanol/15% petrol) in all business uses except heavy vehicles on public roads;
  • Increase from 13.9 to 14.1 cents per litre for liquefied petroleum gas (LPG) ; and
  • Increase from 29.3 to 29.7 cents per kilogram for compressed natural gas (CNG) and liquefied natural gas (LNG).

These changes will affect fuel tax credit calculations for September quarter Activity Statements.

If you claim less than $10,000 in fuel credits each year you can calculate your fuel tax credit using the rate that applies at the end of the BAS period.

The ATO fuel tax credit calculator can be found here.

Please contact us on 1300 885 761 for more information.  

The 80 cents per hour method to claim deductions for home office running expenses has now extended and can be used for the 2020/21 income year. Home office running expenses incurred as a result of working from home can generally be claimed where employees and business owners use their home to carry out genuine income-earning activities.

The hourly rate covers all additional running expenses, namely:

  • Electricity expenses (e.g., in relation to heating, cooling, lighting and electrical items, such as a computer and a printer being used for work).
  • Gas expenses (e.g., in relation to heating).
  • Cleaning costs for a dedicated work area at home (e.g., for a dedicated home office).
  • Phone (including mobile phone) and internet expenses.
  • Computer consumables (e.g., printer paper and printer cartridges).
  • Depreciation of office furniture and furnishings (e.g., an office desk and a chair).
  • Depreciation of home office equipment (e.g., computers and printers).

The 80 cents per hour method is an optional and alternative method to claiming home office running expenses and that individuals still have the option to use the following existing claim methods, even during the period 1 July 2020 to 30 June 2021:

  • the '52 cents per hour method' (which only covers heating, cooling, lighting, cleaning an depreciation of office furniture); and/or
  • the 'actual method' – which involves analysing separate running costs associated with working from home and claiming the work-related portion of such costs.

The ATO's 80 cents per hour method is generally a more simplified method for claiming home office running expenses compared to above existing claim methods. This is particularly because it is simply based on a fixed hourly rate of 80 cents for each hour worked at home and will only require minimal records to be kept (i.e., a record of the number of hours worked from home during this period).

A deduction can only be claimed by a taxpayer in these circumstances for expenses associated with their home, where the relevant expense:

  • has been incurred by the taxpayer (and not paid for by a third party – e.g., an employer);
  • has a sufficient connection with the taxpayer's income-earning activities; and
  • can be substantiated or verified (e.g., by providing written evidence of the expense and a record of the hours worked at home to verify the deduction portion of the expense).

If you would like any further information or assistance in regards to Home Office Expenses, please feel free to contact us on 1300 885 761.

Several Bills containing important superannuation measures which may impact you have passed both Houses of Parliament. These measures have now also received Royal Assent, which is the final step required for a parliamentary bill to become law.

The two changes which affect self-managed superannuation funds are:

1.       Treasury Laws Amendment (More Flexible Superannuation) Bill 2020: which extends the three year non-concessional contribution bring forward rule to individuals under age 67. This measure is effective 1 July 2020.

Two important amendments were made to the Bill to provide for:

  • Removal of the excess concessional contribution charge
  • Ability to re-contribute COVID-19 early release amounts without impacting your non-concessional contribution cap

Removal of the excess concessional contribution charge

Starting 1 July 2021, the excess concessional contribution charge will be removed. The excess concessional contributions charge is an interest penalty that applies to the increased tax liability due to adding excess concessional contributions to assessable income.

Excess concessional contributions will still be automatically added to an individual's personal assessable income and taxed at personal marginal tax rates. Individuals will also remain entitled to non-refundable tax offset equal to 15%.

COVID-19 re-contributions

If an individual made an early super withdrawal under the former COVID-19 condition of release, they may re-contribute these amounts without it counting towards their non-concessional contributions cap.

To be eligible, re-contributed amounts must be made between 1 July 2021 and 30 June 2030. The total amount of contributions covered under this exemption must not exceed the COVID-19 release amount. An individual will not be eligible to claim a personal tax deduction on amounts they elect to treat as COVID-19 re-contributions.

2.       Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill 2020: permits the maximum number of members allowed in a self-managed superannuation fund and small APRA fund to increase from four to six. This measure will commence from 1 July 2021.

You should note that some states including NSW only permit up to four individual trustees. Members who are impacted by state-based law limitations may wish to consider a corporate trustee if they wish to expand the SMSF to five or six members.

How can we help?

If you have any questions, require assistance or would like further clarification with any aspect of above superannuation changes, please feel free to contact us on 1300 885 761.

2021 NSW COVID-19 Micro-Business Grant

The 2021 COVID-19 Micro-Business Grant provides a fortnightly payment of $1,500 to NSW micro businesses (small business, sole traders or not-for-profits organisations with aggregated annual turnover between $30,000 and $75,000) who have been impacted by the recent COVID-19 restrictions.

Applications opened on 26 July 2021 and close at 11:59pm on 18 October 2021.

Eligibility

To be eligible, a business must:

  • have an active Australian Business Number (ABN) registered in, or demonstrate your business was primarily operating in, NSW as at 1 June 2021;
  • have had aggregated annual turnover between $30,000 and $75,000 for the year ended 30 June 2020;
  • have experienced a decline in turnover of 30% or more due to the public health orders over a minimum 2-week period within the Greater Sydney lockdown period (commenced 26 June 2021  and due to end 28 August 2021), compared to the same period in 2019;
  • have business costs for which no other government support is available;
  • have not applied for either the 2021 COVID-19 Business Grant or the JobSaver payment;
  • maintain your employee headcount as at 13 July 2021 while receiving payments from this grant, if you're an employing business;
  • have this business as your primary income source, if you're a non-employing business such as a sole trader.

Note: Only one application can be submitted for a single ABN, therefore separate businesses under one ABN will not be eligible separately.

Certain entities, including those primarily earning passive income (such as rents, interest or dividends) or those with an ABN registered after 1 June 2021, are not eligible for this grant.

Evidence to support eligibility

  • submit evidence of your business' decline in turnover of 30% or more over a minimum 2-week period within the Greater Sydney lockdown period (commenced 26 June and due to end 28 August 2021) compared to the same period in 2019. This will be in the form of a:
    • letter from a qualified accountant, registered tax agent or registered BAS agent, or
    • business bank account statement (separate from any personal accounts).
  • submit evidence of an aggregated annual turnover between $30,000 and $75,000 for the year ended 30 June 2020. This can be in a form of a:
    • letter from a qualified accountant, registered tax agent or registered BAS agent; or
    • business activity statement (BAS); or
    • business bank account statement (separate from any personal accounts); or
    • Australian income tax return (or Notice of Assessment) – businesses can choose to redact their tax file number.
  • if you do not have employees, declare that the business is the primary income source for the owner of the business;
  • if you do have employees, declare that you will maintain your employee headcount on 13 July 2021 for the period for which the business is receiving grant payments and notify Service NSW if employee headcount declines over the period of the payment due to any actions of the business, and
  • lodge other supporting documents, as required, to demonstrate that they meet the eligibility criteria.

Alternative circumstances

If your micro-business does not meet all the eligibility criteria, you may still be able to apply for the grant. See the alternative circumstances outlined in the guidelines.

What you need

  • a MyServiceNSW Account
  • your proof of identity
  • your valid ABN/ACN number
  • your business banking details for payment
  • a business activity statement (BAS)
  • Australian income tax return or Notice of Assessment.

Once deemed eligible, businesses will receive automatic fortnightly payments. Businesses will not need to re-apply, but businesses with employees must notify Service NSW if they are not maintaining the number of employees they had on 13 July 2021. Payments will be made in arrears with the first payment backdated to 26 June 2021.

How to apply

Details of Micro-Business Grant can be accessed here.                          

The application can be lodged online through Service NSW website. Or if you are not able to apply online, you can call 13 77 88.

If you would like any further information or assistance with Micro-Business Grant please contact us on 1300 885 761.

2021 NSW COVID-19 JobSaver Payment

The JobSaver program provides NSW businesses, sole traders and not-for-profits impacted by recent COVID-19 restrictions with fortnightly payments to maintain the 13 July 2021 employee headcount.

Eligible businesses and not-for-profit organisations with employees will receive fortnightly payments to cover costs incurred from week 4 of the Greater Sydney lockdown (from 18 July 2021 onwards).

Applications opened on 26 July 2021 and close at 11:59pm on 18 October 2021. Payments will be backdated to 18 July 2021.

The payment will be equivalent to 40% of the weekly payroll for work performed in NSW:

  • minimum payment will be $1,500 per week
  • maximum payment will be $10,000 per week.

Weekly payroll should generally be determined by referring to the most recent Business Activity Statement (BAS) provided to the ATO before 26 June 2021 for the 2020-21 financial year.

If you're a non-employing business, such as a sole trader, you may be eligible to receive a payment of $1,000 per week.

Businesses that have applied and are eligible for the 2021 COVID-19 Business Grant will generally be automatically eligible for JobSaver but must provide further information on employee headcount and payroll. These businesses may be contacted by Service NSW if further information is required.

Eligibility

To be eligible, a business must:

  • have an active Australian Business Number (ABN) and be operating in NSW as at 1 June 2021;
  • have had a national aggregated annual turnover between $75,000 and $50 million (inclusive) for the year ended 30 June 2020;
  • have experienced a decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the Greater Sydney lockdown period (commenced 26 June) compared to the same period in 2019;
  • for employing businesses, maintain your employee headcount on 13 July 2021 while you continue to receive JobSaver payments;
  • for non-employing businesses, such as sole traders, show that the business is the primary income source for the associated person. If you have more than one non-employing business, you can only claim payments for one business.

Note: Each ABN can apply for JobSaver only once, therefore separate businesses under one ABN will not be eligible separately.

Evidence to support eligibility

If your business is on the highly impacted industries list, you will be required to:

  • declare that you meet the eligibility criteria;
  • declare your employee headcount at 13 July 2021;
  • if you have employees, declare that you will maintain your employee headcount on 13 July 2021 for the period for which you will receive JobSaver payments. Service NSW must be notified if the headcount declines over the payment period;
  • if you do not have employees, declare that the business is the primary income source for the owner of the business;
  • submit an Australian income tax return, Notice of Assessment or other documentation demonstrating the business had a national aggregated annual turnover between $75,000 and $50 million (inclusive) for the year ended 30 June 2020;
  • provide details of your qualified accountant, registered tax agent or registered BAS agent;
  • provide evidence of weekly payroll;
  • lodge other supporting documents as required to demonstrate you meet the eligibility criteria.

If your business is not on the highly impacted industries list, in addition to the evidence requirements outlined above, you will need to:

  • Submit a letter from a qualified accountant, registered tax agent or registered BAS agent, using the template provided, to demonstrate that you experienced a decline in turnover over a minimum 2-week period within the Greater Sydney lockdown period (commenced 26 June) compared to the same period in 2019.

Alternative circumstances

If your business does not meet all the eligibility criteria, you may be able to apply for JobSaver if you can provide evidence to support the alternative circumstances outlined in the guidelines.

What you need

  • A MyServiceNSW Account – you can create one when you start your JobSaver application
  • your proof of identity
  • your valid ABN/ACN number
  • your business banking details for payment
  • evidence of your annual turnover and loss of income
  • Australian income tax return or Notice of Assessment
  • qualified accountant, registered tax agent or registered BAS agent details, where required.

Once deemed eligible, businesses will receive automatic fortnightly payments. Businesses will not need to re-apply but must notify Service NSW if they are not maintaining the number of employees they had on 13 July 2021. Payments will be made in arrears with the first payment backdated to 18 July.

How to apply

Details of JobSaver Payment can be accessed here.                                 

The application can be lodged online through Service NSW website. Or if you are not able to apply online, you can call 13 77 88.

If you would like any further information or assistance with JobSaver Payment please contact us on 1300 885 761.

2021 NSW COVID-19 Business Grant

The 2021 COVID-19 business grant will be open to NSW businesses which have less than $10 million in total wages and aggregated annual turnover between $75,000 and $50 million for the year ended 30 June 2020. The intention of the Grant is to help businesses survive the lockdown so they can continue to support employment and the economy after restrictions are lifted.

Applications will open on 19 July 2021 and close at 11:59pm on 13 September 2021.

Businesses that received previous COVID-19 small business grants, including the 2020 Small Business COVID-19 Support and Small Business Recovery grants, can apply for this Grant. However, non-employing businesses are not eligible to apply if persons associated with the business, and who derive income from it, have applied for, or are receiving, the Commonwealth COVID-19 Disaster Payment.

Available funding

Eligible businesses (including non-employing businesses such as non-employing sole traders) and not-for-profit organisations can apply for a one-off grant of $7,500 (tier one), $10,500 (tier two) or $15,000 (tier 3) via one application:

  • $7,500 (tier one): Businesses that have experienced a decline in turnover of 30% or more due to the Public Health Orders will be eligible for a grant of $7,500.
  • $10,500 (tier two): Businesses that have experienced a decline in turnover of 50% or more due to the Public Health Orders will be eligible for a grant of $10,500.
  • $15,000 (tier three): Businesses that have experienced a decline in turnover of 70% or more due to the Public Health Orders will be eligible for a grant of $15,000.

Note: Eligible businesses may only receive one grant tier and only one grant is available for a single ABN.

Eligibility

To be eligible, a business must:

  • have an Australian Business Number (ABN) and be operating in New South Wales as at 1 June 2021;
  • have total annual Australian wages of $10 million or less as at 1 July 2020;
  • had an aggregated annual turnover between $75,000 and $50 million (inclusive) for the year ended 30 June 2020;
  • have business costs for which there is no other government support available;
  • maintain their employee headcount as at 13 July 2021 for the period for which the business is receiving payments under this Grant and the JobSaver scheme;
  • must experience a decline in turnover over a minimum 2-week period from 26 June 2021 to 17 July 2021, compared to the same period in 2019:
    • $7,500 for a decline of 30% or more
    • $10,500 for a decline of 50% or more
    • $15,000 for a decline of 70% or more.
      • for Southern Border businesses the turnover period is from 27 May 2021 to 17 July 2021 compared to the same period in May and/or June and/or July 2019.

Evidence in support of eligibility

If your business is on the highly impacted industries list, you will be required to:

  • declare that you experienced a decline in turnover as outlined above based on different tiers;
  • declare that you have eligible expenses for which there is no other support available. You will not be required to provide evidence of costs on application (e.g. invoices) but will need to keep evidence of costs for a possible future audit;
  • declare your employee headcount at 13 July 2021;
  • declare you will maintain your employee headcount as at 13 July 2021 for the period for which the business is receiving payments under this Grant and the JobSaver scheme;
  • provide details of your qualified accountant, registered tax agent or registered BAS agent for possible compliance checking;
  • submit an Australian Income Tax Return (or Notice of Assessment) or other documentation to demonstrate your business had an aggregated annual turnover of between $75,000 and $50 million (inclusive) for the year ended 30 June 2020; and
  • lodge other supporting documents as required to demonstrate that you meet the eligibility criteria.

If your business is not on the highly impacted industries list, in addition to the evidence requirements outlined above, you will need to:

  • Submit a letter from a qualified accountant, registered tax agent or registered BAS agent, to demonstrate that you experienced a decline in turnover over a minimum 2-week period within the Greater Sydney lockdown (commenced 26 June) compared to the same period in 2019.

How to apply

Details of The Grant can be accessed here.                                                 

The application can be lodged online through Service NSW website. Or if you are not able to apply online, you can call 13 77 88.

If you would like any further information or assistance with 2021 Covid-19 Business Grant please contact us on 1300 885 761.

Superannuation Guarantee and rate changes

The superannuation guarantee is legislated to increase from 9.5 per cent to 12 per cent in 0.5 percentage point increments from 2021 through to 2025. This means the superannuation guarantee rate will increase to 10 per cent from 1 July 2021 and rise by 0.5 per cent per year thereafter until it reaches 12 per cent by 2025.

What is the Super Guarantee?

The Super Guarantee or SG for short, is the contribution an employer is required to make into a super fund on behalf of an employee. The current rate is 9.5% of an employee's base salary, with this rate currently set to continue until 1 July 2021, when it is due to increase to 10%.

Below are the past and present SG rates, as well as the currently legislated future changes to the rate from the Australian Government:

Financial Year

Super Guarantee Rate

1 July 2002 – 30 June 2013

9%

1 July 2013 – 30 June 2014

9.25%

1 July 2014 – 30 June 2021

9.5%

1 July 2021 – 30 June 2022

10%

1 July 2022 – 30 June 2023

10.5%

1 July 2023 – 30 June 2024

11%

1 July 2024 – 30 June 2025

11.5%

1 July 2025 – 30 June 2026 and onwards

12%


Who qualifies for the superannuation guarantee?

Almost all full-time, part-time and casual employees over 18 years of age, earning more than $450 per month are eligible for super guarantee contributions, or SGC. Employees under 18 years and private domestic workers (such as nannies) who earn more than $450 per month and work more than 30 hours a week are also eligible. Even certain contractors may be deemed to be eligible.

If you would like any further information or assistance with complying with your super guarantee obligations please contact us on 1300 885 761.

With the end of the financial year fast approaching, now is the perfect time to make some final checks and ensure everything is in order for your SMSF before 30 June. The following are some matters that you might want to know more about.

Contributions

From 1 July 2020, if you were under the age of 67 you were able to make voluntary contributions without meeting a work test. This was previously restricted to people below age 65. In addition, if 2020-21 is the first year that you no longer satisfied the work test, you may still be able to make voluntary contributions under the work test exemption if you had a total superannuation balance (TSB) of less than $300,000 on 30 June 2020.

Therefore, it is important to review your contribution strategies before 30 June 2021, to make sure you maximise your contribution opportunities whilst ensuring you are below your contribution caps.

Non-concessional (after-tax) contributions are limited to $100,000 for the 2021 financial year and only available if your TSB was less than $1.6m on 30 June 2020. 

If you were under 65 at any time during the 2020-21 financial year, you can potentially contribute up to three times the non-concessional cap (or $300 000) at once. The maximum bring forward non-concessional contribution amount you can make will depend on your TSB on 30 June 2020. Please note that draft legislation to allow older individuals to make up to three years of non-concessional superannuation contributions under the bring forward rules, has yet to be passed.

Concessional (before-tax) contributions are limited to $25,000 for the 2021 year. You may also be eligible, subject to your TSB, to make larger concessional contributions if you have any unused concessional contribution cap from the 2019 financial year onwards.

Where you have made personal contributions and intend to claim a tax deduction in 2020-21, it is important that you reconcile all employer contributions and salary sacrificed amounts to superannuation to make sure you do not breach the annual concessional contributions cap. It is also important to ensure that the relevant notice requirements are met so that you can claim a deduction.

These annual limits will increase on 1 July 2021 to $110,000 for non-concessional contributions and $27,500 for concessional contributions.

The Government also announced in the latest Federal Budget that the work test will be removed altogether to allow voluntary non concessional contributions and salary sacrificed contributions to be made up to the age of 75. If passed, these changes are expected to be available from 1 July 2022.

Meeting new pension requirements

To help manage the economic impact of COVID-19, the Government reduced the minimum drawdown requirements by half on account-based pensions and market-linked pensions for 2020-21. The Government recently announced the 50% reduced minimum pension drawdown requirements will be extended for 2021-22.

Whether or not you have taken advantage of this reduction, it is important that you reconcile all pension payments received to ensure you do not underpay the minimum pension payment required by 30 June 2021. Where this requirement is not met, SMSFs will be subject to 15% tax on pension investments instead of being tax free.

All pension withdrawals for 2020-21 must be paid in cash by 30 June 2021 and cannot be accrued or adjusted using a journal entry so it is important to attend to this as soon as possible. For example, if you are making pension payments via an electronic transfer, you need to ensure that online transfers show the money coming out of the fund's bank account by no later than 30 June.

How can we help?

If you have any questions, require assistance or would like further clarification with any aspect of your end of year superannuation matters, please feel free to contact us on 1300 885 761 to discuss your particular requirements in more detail.

2021/22 Federal Budget Highlights

On 11 May 2021 the Budget for 2021–22 was released. The measures announced as part of the 2021–22 Budget are subject to receiving royal assent and are not yet law.

There are a number of changes that may have an impact on your business, personal or superannuation situation. The key points are:

Personal income tax

1. Retaining the Low and Middle Income Tax Offset ('LMITO')

The Government has announced that it will retain the LMITO for one more income year, so that it will still be available for the 2022 income year. Under current legislation, the LMITO was due to be removed from 1 July 2021.

The maximum offset proposed for the 2022 income year is $1,080 per annum. However, the amount you receive depends on your income and how much tax you've paid throughout the year. It doesn't mean that you will automatically get an extra $1,080 in your tax return.

2. Increasing the Medicare levy low-income thresholds

The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as follows:

  • The threshold for singles will be increased from $22,801 to $23,226.
  • The family threshold will be increased from $38,474 to $39,167.
  • The threshold for single seniors and pensioners will be increased from $36,056 to $36,705.
  • The family threshold for seniors and pensioners will be increased from $50,191 to $51,094.

For each dependent child or student, the family income thresholds increase by a further $3,597, up from the previous amount of $3,533.

Business income tax

1. Temporary full expensing extension

In the 2021/22 Federal Budget, the Government has announced that temporary full expensing will be extended by 12 months until 30 June 2023 to allow eligible businesses with aggregated annual turnover or total income of less than $5 billion to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023. All other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.

2. Temporary loss carry-back extension

In the prior year (2020/21) Federal Budget, the Government announced amendments to introduce a temporary loss carry-back measure. Broadly, this initial measure allowed 'corporate tax entities' with an aggregated turnover of less than $5 billion to carry back tax losses made in the 2020, 2021 and/or 2022 income years to claim a refund of tax paid (by way of a tax offset) in relation to the 2019, 2020 and/or 2021 income years.

In the 2021/22 Federal Budget, the Government has announced that the loss carry-back measure will be extended to allow eligible companies (i.e., with aggregated turnover of less than $5 billion) to also carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year.

Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it was able to deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt owing to the ATO.

The eligible entity does not need to amend the earlier income years to claim the offset.

Consistent with the current law, the tax refund available under this measure is limited by requiring that the amount carried back is not more than the earlier taxed profits and does not generate a franking account deficit. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.

Superannuation

Please refer to our article '2021-22 Federal Budget Update – A strong Budget for SMSFs' for the detail regarding superannuation changes.

Please feel free to contact us on 1300 885 761 if you have any questions or would like further information in regards to any of the above changes.

As expected, this year's Federal Budget has a strong emphasis on job growth and women's security. From an SMSF perspective, there were some welcome surprises for SMSF trustees, the key measures that you should be aware of are outlined below. 

All measures outlined below, other than the proposed changes to legacy retirement products, are expected to commence from 1 July 2022, once they have received Royal Assent. 

Repealing the work test for voluntary contributions

Individuals aged 67 to 74 (inclusive) will be able to make non-concessional (including under the bring-forward rule) or salary sacrifice contributions without meeting the work test, subject to existing contribution caps and existing total superannuation balance limits. 

Reducing the eligibility age for downsizer contributions

The eligibility age to make downsizer contributions into superannuation will be reduced from 65 to 60 years of age. All other eligibility criteria remains unchanged, allowing individuals to make a one-off, post-tax contribution to their superannuation of up to $300,000, per person, from the proceeds of selling their home. These contributions will continue not to count towards non-concessional contribution caps. 

Relaxing residency requirements for SMSFs

SMSFs and small APRA funds will have relaxed residency requirements through the extension of the central management and control test safe harbour from two to five years. The active member test will also be removed, allowing members who are temporarily absent to continue to contribute to their SMSF. 

Removing the $450 per month threshold for superannuation guarantee eligibility

The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid the superannuation guarantee by their employer. 

Legacy retirement product conversions

Individuals will be able to exit a specified range of legacy retirement products, together with any associated reserves over a two-year period. The specified range of legacy retirement products includes market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual's contribution cap. 

Social security and taxation treatment will not be grandfathered for any new products commenced with commuted funds. Amounts commuted from reserves will be taxed as an assessable contribution but will not count towards an individual's concessional contribution cap or give rise to excess contributions. 

This measure will take effect from the first financial year after the date of Royal Assent of the enabling legislation.  


How can we help?
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2021-22 Federal Budget, please feel free to contact us on 1300 885 761.