Changes to super on 1 July 2022

From 1 July 2022, super measures that were announced in the 2021 Federal Budget will come into effect. These measures aim to support both older and younger Australians get the most out of their super. 

Here’s a summary of the changes. If you have a financial adviser they can help you determine whether any of these changes may be beneficial to your retirement strategy.

1.    Good news for older workers

Effective 1 July 2022, individuals aged between 67-74, won’t need to satisfy the ‘work test’ before making non-concessional contributions and salary sacrifice contributions to their superannuation. However, to claim a tax deduction on a personal contribution, individuals still need to satisfy the work test requirement. Please speak with your adviser if you have one, or refer to the ATO for eligibility requirements.

This change also enables the use of the ‘bring forward’ provisions to be extended, meaning individuals have from age 67 to the year they turn 75 to bring forward non-concessional contribution caps if the total super balance and remaining contribution cap allows it.
 

2.    Supporting retirees during market downturns

In 2020, the Government announced a temporary reduction to the minimum pension drawdown rates to support older Australian during the pandemic. The temporary extension will be extended for 2022/23 financial year.

If you are receiving the reduced minimum as at 30 June 2022 this will be automatically carried over on 1 July 2022.

The reduced minimum drawdown rates for the 2022/23 financial year:  


Age

Standard percentage of Account Balance

Reduced minimum rates for the 2019/20 to 2022/23 financial years
Under 65 4% 2%
65 to 74 5% 2.5%
75 to 79 6% 3%
80 to 84 7% 3.5%
85 to 89 9% 4.5%
90 to 94 11% 5.5%
95 or more 14% 7%

Please speak with your adviser if you have one or refer to the ATO website
 

3.    Downsize your home, and boost your super balance

A downsizer contribution allows older Australians to contribute up to $300,000 from the proceeds of their main residence into a complying super fund without it being assessed under the contribution caps.

Currently, individuals need to be aged 65 or over to make a downsizer contribution. From 1 July 2022, the age will decrease to 60, allowing those in their early 60s to start their plan to downsize, and contribute part of the sale proceeds to boost their super balances.

Though the eligibility age will be reduced, all other requirements to meet the downsizer eligibility will remain the same, such as having owned the house for at least 10 years, and not having used the downsizer contribution before.

Please speak with your adviser if you have one, or read more about downsizer contributions.
 

4.    More help for first home buyers

The First Home Super Saver Scheme (FHSS scheme) allows super members to access a portion of any voluntary super contributions they’ve made and any associated earnings to help purchase their first home.

From 1 July 2022, the maximum amount a person can access will increase from $30,000, to $50,000. However, the amount of eligible contributions that can count towards the FHSS maximum releasable amount remains at $15,000 each financial year.

Please speak with your adviser if you have one, or read more about first home buyers superannuation.
 

5.    Low-income earners are entitled to receive super

Previously, employers didn’t need to make Super Guarantee (SG) contributions if an employee earnt less than $450 a month. This means many low-income earners, or people with multiple part-time jobs, may not have received any super in their workplace.

From 1 July 2022, the removal of the $450 monthly income threshold means employers will be obliged to make SG contributions for all employees, regardless of how much they earn (unless they’re under 18 and work less than 30 hours per week).

This is great news for those who work casually or part time, or those returning to the workforce to help them build, or rebuild, their superannuation balances.
 

6.    Super Guarantee (SG) Rates are increasing

 From 1 July 2022, the SG rate will increase from 10% to 10.5%, and increase by 0.5% each year until it reaches 12% on 1 July 2025: 


Financial years

SG Rate
1 July 2021 - 30 June 2022 10.00%
1 July 2022 - 30 June 2023 10.50%
1 July 2023 - 30 June 2024 11.00%
1 July 2024 - 30 June 2025 11.50%
1 July 2025 - 30 June 2026 and onwards 12.00%

7.    Rebuild your super after COVID-19 early release withdrawal

If an individual withdrew super under the COVID-19 early release of super program in 2020, they can now contribute the money back into super, and rebuild their balance.

If additional personal super contributions result in an individual exceeding the non-concessional contributions cap, they may be eligible to have it treated as a 'COVID-19 re-contribution', which is excluded from the non-concessional contributions cap.

Please speak with your adviser if you have one, or refer to the ATO website