By Renee Ballinger
From 1 July 2022 there are a number of changes to superannuation legislation that will come into effect that both business owners and individuals need to be aware of.
Superannuation Guarantee Rate Increase
The main change that will affect most of us is the increase in the Superannuation Guarantee (SG) rate from 10% to 10.5%. The aim here is to boost long-term superannuation for employees, with the Government continuing to increase the rate each year until it eventually reaches 12%. This change applies to ordinary time earnings for employees for the first pay run paid after 1 July 2022 (regardless of when the wages were ‘earned’).
Removal of $450 Monthly Threshold
The $450 a month wage threshold for Superannuation Guarantee contributions will be removed from 1 July 2022, meaning that more superannuation will be paid for more Australians. This includes casual and part-time employees, as well as those under the age of 18 who work more than 30 hours per week. Basically, the only exception for superannuation on ordinary earnings will be for employees that are under the age of 18 and working less than 30 hours per week.
First Home Super Saver Scheme Expanded
The maximum withdrawal from the First Home Super Saver Scheme will increase from $30,000 to $50,000. It is important to note however, that the annual limit for voluntary contributions eligible for the scheme remains at $15,000 per financial year.
Work Test Abolished
The work test for retirees aged between 67 and 74 will be removed from 1 July 2022, meaning that they are able to top up their super by making voluntary super contributions without having to satisfy any additional tests. Note that the Total Super Balance cap of $1.7m and the contribution caps will still apply in respect of these contributions, and a work test may still need to be satisfied when making personal contributions where there is an intention to claim a tax deduction.
Downsizer Contribution Age Limit Decreased
There will be a drop in the age limit for members to access the downsizer scheme, which allows you to make a one-off contribution into your super of up to $300,000 (or $300,000 each for a couple) from the sale of the family home, with the age limit reducing from 65 to 60 years of age. This does not count towards any concessional or non-concessional contribution caps.
If you would like any further information on these, or any other upcoming superannuation changes, please contact the team at UHY Haines Norton on 07 4972 1300 or email@example.com.