Blog Layout

1 July 2022 and superannuation contribution changes

Dawson & Partners • May 30, 2022

Several key super changes which may impact your ability to contribute to your SMSF, are set to take effect from 1 July 2022. These changes create opportunities for all SMSF members, young and old, to grow their retirement savings.

What are the changes?

Originally announced in the 2021 Federal Budget, the following changes apply from 1 July 2022:

  • Individuals up to the age of 74, will no longer need to meet a work test to make voluntary, non-deductible, contribution
  • Individuals up to the age of 75, with a total super balance under $1.7 million, will have the opportunity to make large non-concessional contributions (possibly up to three years' worth) in a single year
  • The minimum age to make downsizer contributions will reduce to 60, allowing more individuals to use the proceeds from the sale of their home, to fund their retirement
  • The Superannuation Guarantee (SG) rate will increase to 10.5% p.a. for all and the $450 minimum income threshold for SG contributions, will be removed
  • Under the First Home Super Super Scheme (FHSSS) eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit.

How can you benefit from these changes?

The Work Test

Currently, if you are aged 67 to 74, you can only make voluntary contributions to super if you have worked at least 40 hours over 30 consecutive days in the financial year, or you satisfy the recently retired test.   The work test must be met prior to contributing.

From 1 July 2022, this work test will only apply to you if you wish to claim a tax deduction for the voluntary contributions you make to your SMSF. If making personal deductible contributions, from 1 July 2022, you will be able to meet the work test at any time in the financial year.

This means that the work test will no longer apply to contributions you make under a salary sacrifice arrangement or for any personal contributions that you don't claim a tax deduction for, such as non- concessional contributions.

Non-concessional Contribution

Currently, only if you were under the age of 67 on 1 July of the financial year, can you make non-concessional contributions which exceed   the annual $110,000 non-concessional contributions cap. Currently, the bring-forward rules allow you to make up to $330,000 (i.e. three years' worth of non-concessional contributions), in a single year if your total super balances was under $1.48 million as at 30 June of the previous financial year, or $220,000 if your total super balances was greater than or equal to $1.48 million but less than $1.59 million as at 30 June of the previous financial year.

From 1 July 2022, the cut-off age to access the bring rules will increase to 75. However, the total super balance thresholds referred to apply above, still apply.  

This means that if you are 74 on 1 July 2022 and you have a total super balance of less than $1.48m, you may be able to have one last boost to your retirement savings by making a $330,000 non-concessional contribution to your SMSF. The contribution simply must be made, no later than 28 days after the month in which you turn 75.

Downsizer Contributions

Currently, you can only make a downsizer contribution if you are 65 or older at the time of the contribution and have satisfied the other eligibility requirements.

From 1 July 2022, the minimum age will reduce to 60. All other eligibility rules remain unchanged and the maximum amount of downsizer contributions that can be made remains at $300,000 per person or $600,000 per couple.

If you are selling your home and expect to receive the sale proceeds close to the end of this financial year, please contact our office to discuss the timing of a downsizer contribution and the potential to boost other contribution opportunities in 2022-23. For example, if you get the timing right, you may be able to combine a downsizer contribution with the bring forward rules to contribute up to $630,000 to your SMSF, in one year. As a couple this could present a one-off opportunity to boost your retirement savings by $1.26m.

First Home Super Saver Scheme (FHSSS)

Currently the FHSSS allows you to withdraw a maximum of $30,000 of voluntary contributions (plus associated earnings/less tax) from your super fund to fund the deposit of a new home.

From 1 July 2022, the maximum amount that can be withdrawn will increase to $50,000 meaning each eligible person will be able to withdraw an additional $20,000. All other eligibility rules remain unchanged.

Also unchanged is the maximum amount of contributions that an individual can make each year that can count towards the FHSSS – this remains at $15,000 p.a. This means that it will take a member, at least four years of voluntary contributions, to reach the higher $50,000 limit.

How can we help?

Navigating your way through the superannuation contribution rules can be very complex, especially in the lead up to a member's retirement. If you have any questions, require assistance, or would like to discuss whether any of these opportunities apply to you, please feel free to give us a call on 1300 885 761 to arrange a time to discuss.

Christmas 2022

07 Dec, 2022
Christmas 2022

Time is running out to apply for a Director Identification Number (director ID)

22 Nov, 2022
You may have heard about the new rules which require directors of Australian companies to obtain a Director Identification Number (director ID). It is a unique 15-digit identifier that directors apply for once and keep forever. The following provides some useful further information. As a director of my SMSF’s corporate trustee do I need a director ID? The new requirement to obtain a director ID applies to all directors of corporate trustees of an SMSF. The only exclusion applies to a director who has resigned from all director roles during the period 04 April 2021 to 30 November 2022 and has no intention to ever be appointed as a director or alternate director of an Australian or foreign company. How long do I have before I need to get my director ID? Individuals that were a director of any company prior to 1 November 2021 have until 30 November 2022 to get a director ID. This transitional period also applies to newly appointed directors of corporate trustees of an SMSF, provided they were an existing director, of a company, before 1 November 2021. Otherwise, first time directors are now required to have a director ID before they are appointed as director of any company. What is the fastest way to apply for a director ID? With 30 November 2022 fast approaching, we strongly encourage all directors to apply for their director ID now. The fastest way to apply for your director ID is online at abrs.gov.au/directorID . To access the director ID application online, you will use your myGovID to log in to ABRS (Australian Business Registry Services) online. This director ID demonstration video will show you step by step, how to apply for your director ID online. What to do if you do not have a MyGovID already? A myGovID is different to your myGov account. Your myGov account allows you to link to and access online services provided by the ATO, Centrelink, Medicare and more, while myGovID is an app that enables you to prove who you are and to log in to a range of government online services, including myGov. If you do not already have a myGovID you will need to set this up before you can apply for your director ID online. Refer to mygovid.gov.au/setup for more information on setting up a myGovID. You will need to choose your identity strength, noting that ‘standard’ identity strength is the minimum strength required for a director ID. What if I can’t set up myGovID online? Where you are experiencing difficulties setting up your myGovID, the ATO encourages you to contact them on 13 62 50. To speed up the phone application, please have your TFN ready as well as the information listed below, required to verify your identity. If you cannot apply online or over the phone, the ATO will provide you with a paper form to complete. This is the least preferred option and will require you to provide certified copies of your documents to verify your identity. Can we help you get your director ID? You must apply for your director ID yourself, so that the ATO can verify your identity. To verify your identity against your ATO records, once you have logged into ABRS online using myGovID, you'll need your tax file number, your residential address held by the ATO, and information from two of the following documents: bank account details (where your tax refunds or payments are made and received) an ATO notice of assessment a dividend statement a Centrelink payment summary a PAYG payment summary (this is different to your income statement or your PAYG instalment activity statement). How can we help? If you have any questions or would like further information about director IDs, please feel free to give us a call on 1300 885 761, so we can discuss your requirements in more detail. Although we are unable to apply for a director ID on your behalf, we would be more than happy to guide you through the process and where possible, source documents to help you verify your identity with the ATO.  For other information, resources, and timely updates relevant to your SMSF, please refer to the SMSF Association’s trustee education platform, SMSF Connect.

Superannuation Guarantee due date for payment – 28 October 2022

By Dawson & Partners • 23 Oct, 2022
All employers are required to pay and report super guarantee payments electronically to ensure they meet SuperStream requirements. With the introduction of SuperStream it is now easier for the ATO to monitor your payments to ensure they have all been paid on time. Super guarantee payments must be made by employers to their employees' complying funds by quarterly due dates, which are 28 days after the end of each quarter. The due dates for each quarter are as follows: 
More Posts
Share by: