The start of 2022 financial year brings with it changes to superannuation. The changes are aimed at helping to grow an individual’s superannuation balance in retirement.
The first big change will benefit employees, with the Superannuation Guarantee contribution rate increasing from 9.5% to 10%. The Superannuation Guarantee rate is the minimum amount of an employee’s ordinary time earnings that their employer must pay into their superannuation account. This increase is part of the Federal Government’s long term plans to increase the Superannuation Guarantee rate to 12% by 2025.
The Federal Government have also announced plans to remove the minimum $450 gross monthly earnings threshold that the Superannuation Guarantee applies to from 1 July 2022. This measure is aimed at expanding the coverage of the Superannuation Guarantee to eligible employees, regardless of their monthly pay. This measure is not yet law.
The new year also sees increases to the contribution caps. From 1 July 2021, both the concessional (before-tax) and non-concessional (after-tax) contributions have increased as shown below.
|Concessional cap (before tax contributions)
|Non-concessional cap (after tax contributions)
Additionally, if your total superannuation balance at 30 June 2021 is less than $500,000, you may be eligible to increase your concessional contribution cap by utilising any unused cap amounts from the 2019/20 financial year onwards. Unused concessional contribution caps are available for a maximum of five years and will expire after this time.
In a win for individuals, the Federal Government have removed the excess contributions charge from 1 July 2021. Accordingly, individuals who exceed their contributions cap will no longer be charged an excess contributions charge. They will however, still be issued with a determination and taxed at their marginal tax rate on any excess concessional contributions amount.
Changes to Age Restrictions
The Federal Government have also made changes to the Work Test requirements. Previously, if you were aged 65 years or older, you need to satisfy the Work Test requirements for your fund to be able to accept member contributions. From 1 July 2021, if you are aged 67 years or older, you will be required to meet the Work Test for your super fund to accept member contributions.
In addition to the increases in the contribution caps, the Federal Government has also made changes to the age restriction in relation to bring-forward arrangements. Previously, individuals aged 65 and 66 were not able to access the bring forward non-concessional contributions cap. From 1 July 2021, this age restriction has been increased to 67 years.
Transfer Balance Cap
The Transfer Balance Cap is the maximum amount of super that an individual can transfer into retirement phase income streams during their lifetime. The Transfer Balance cap was previously $1.6 million and has been indexed to a maximum amount of $1.7 million effective 1 July 2021.
However some phasing of this increase to the cap will apply for those members who already have a transfer balance cap at 30 June 2021. New retirement phase pensions started from 1 July 2021 will have the full $1.7 million cap.
Covid – Early Release of Superannuation
The Federal Government have advised that individuals that received early release Covid-19 payments will be eligible to re-contribute up to the amount they received without these contributions counting towards their non-concessional contribution cap. The requirements for these contributions are as follows:
- Can be made between 1 July 2021 and 30 June 2030
- Cannot exceed the total amount of super accessed under the Covid-19 early release scheme and
- Cannot be claimed as a personal superannuation deduction.
Individuals wishing to re-contribute any Covid-19 early release amounts will need to notify their superannuation funds using the approved form.
Please contact your local Accru office for assistance in relation to any of these changes.