Superannuation is something that the government loves to tinker with. A new financial year brings new superannuation rules. Following are the main changes to superannuation that commence from 1 July 2020.
Abolition of the work test for those aged 65 and 66
From 1 July 2020, a member under the age of 67 years can make personal contributions into superannuation without having to satisfy the work test. Prior to 1 July 2020, the work test did not apply to members under 65 years of age. The work test requires the member to work 40 hours in 30 consecutive days prior to the contribution being accepted by the superannuation fund.
Ceasing Work Contributions
New retirees aged between 67 and 74 with a superannuation balance below $300,000 as at the previous 30 June will be allowed to make voluntary superannuation contributions in the first year they no longer meet the work test requirements. Prior to 1 July 2020 the age requirement was between 65 and 74.
Access to the ‘bring forward’ rules from 1 July 2020
If you are under 65, you may make non-concessional contributions up to three times the annual non-concessional cap. The maximum amount depends on your superannuation account balance at 30 June 2020. Draft legislation to increase the age limit from under 65 to under 67 is currently before parliament (as at 28 August 2020).
We would recommend you contact your Accru advisor to provide an update on the legislation if you are considering using the bring-forward rules.
Spouse Contributions and the Tax Offset
If a member makes a contribution to their spouse’s superannuation fund, and the spouse is under 75 and is earning less than $40,000, the member can claim an 18% tax offset on super contributions up to $3,000 (maximum tax offset of $540). The spouse must meet the work test if between the ages of 67 and 75.
Prior to 1 July 2020, the spouse had to be under 70 years of age and the work test had to be met if the spouse was aged between 65 and 70.
Reduction in Minimum pensions
In late March 2020, the government amended the minimum percentage required to be paid for account-based pensions by 50%. This reduction applies to 2019/20 and 2020/21.
Please contact your local Accru advisor should you have any superannuation question.
A fact sheet in respect of superannuation contributions applicable to 1 July 2020 can be found here (insert hyper link to fact sheet).