2022 March – Minerds Bell Newsletter

 

Client Bulletin

from Andrew Harris principal of Minerds Bell Consultancy Group

 

Hi, welcome to our March update.

I hope you are safe and well.

This month we have some good news on the Superannuation front. As the Federal Government looks to “clear the decks” before the general election in May, they finally passed the 2021 Budget superannuation enhancements.

Officially, the “Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021”.

Effective from 1 July 2022, this legislation will implement the following superannuation changes, which were first proposed in the May 2021 Federal Budget. These changes include:

  1. Partially removing the work test for those aged 67 to 75.
  2. Extending the non-concessional contributions bring-forward age limit to age 75.
  3. Reducing the downsizer contribution eligibility age to age 60.
  4. Increasing the maximum First Home Super Saver Scheme withdrawal amount to $50,000.
  5. Removing the monthly minimum threshold for Superannuation Guarantee (SG) Contributions.
  6. Giving greater choice and flexibility to super fund trustees in choosing the taxation method (segregated or proportional) for their fund within a tax year.

Please note that some of these amendments will also require supporting regulations (or amendments to existing regulations) to become effective. These regulations are yet to be introduced.

 

  1. Partially removing the work test for those aged 67 to 75

The existing work test (broadly a minimum of 40 hours of gainful employment within a period of 30 days) or the ‘work test exemption for recent retirees’ will no longer be required from 1 July 2022 for individuals aged 67 to 75 who make/receive salary sacrifice or non-concessional contributions (NCCs).

The work test or recent retiree exemption will still be required for individuals in that age range who wish to claim a tax deduction for their personal contributions. Under the new rules, the work test can be met in any period in the financial year of the contribution. This is different to the current rules, where the work test must be met prior to contributing.

If the client has made a contribution and has not met the work test, they will be ineligible to claim a tax deduction for the contribution. The contribution will be classified as NCC and will count towards the client’s NCCs cap.

The existing upper age limit on making voluntary contributions (within 28 days of the end of the month where the member reached age 75) remains unchanged (with the exception of downsizer contribution). Enabling regulations will be required to give effect to this measure.

What this may mean for you:

 

 

  1. Extending the non-concessional contributions bring-forward age limit

The cut-off age for accessing the NCCs bring-forward rule will be increased from 67 to 75 years.

This means that many individuals aged 67 to 74 years (inclusive) who were not previously able to bring forward NCCs cap amounts due to their age, may now do so from 1 July 2022. Existing restrictions on the full availability of bring forward contributions will continue to apply to individuals with Total Super Balance over $1.48 million.

What this may mean for you:

 

 

  1. Reducing the eligibility age for downsizer contributions to age 60

Individuals aged 60 or older (no upper age limit) at the time the contribution is made can now make downsizer contributions from 1 July 2022.

The maximum downsizer contribution amount of $300,000 per eligible person and other eligibility requirements are unchanged.

What this may mean for you:

 

 

  1. 4. Increasing the maximum First Home Super Saver Scheme withdrawal amount to $50,000

The FHSSS is a scheme that allows first home buyers to save part of their home purchase deposit in the concessionally taxed superannuation environment.

The maximum FHSSS withdrawal amount will be increased from 1 July 2022 from the current limit of $30,000 (plus notional earnings, less tax) to $50,000 (plus notional earnings, less tax).

What this may mean for you:

 

  1. Removing the minimum monthly threshold for SG contributions

From 1 July 2022, there will no longer be a minimum monthly threshold for an eligible employee to qualify for SG contributions.

This means that even where an eligible employee earns less than $450 in a calendar month, there is now an obligation on the employer to make SG contributions.

What this may mean for you:

 

 

  1. Improving flexibility of exempt current pension income calculation

Where a super fund is running both retirement phase pensions and accumulation interests within a year, fund trustees will now have greater flexibility in being able to choose between the ‘segregated’ and ‘proportional’ methods when calculating the fund’s tax liabilities.

This will simplify compliance obligations as in this scenario, trustees could choose to apply the proportionate (unsegregated) method for the whole of the income year based on a single actuary’s certificate.

What this may mean for you:

 

 

If you have any questions about how any of these changes may affect you, please contact your planner. They’d be delighted to assist you.

That’s it for this month. Enjoy the attached articles we hope you find of interest.

That’s all for now.

 

Andrew Harris

Principal – Minerds Bell Consultancy Group

Important information

The information provided in this document is believed to be accurate and reliable at the date of publication. Any advice in this document is general in nature and is provided by AWM Services Pty Ltd ABN 15 139 353 496 (AWM Services). This advice does not take into account any person’s objectives, financial situation or needs. Before acting on any advice, a person should consider its appropriateness as well as the relevant product disclosure statement before making a decision. AWM Services is a part of AMP group.

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