Boost your super from 1 July 2022

Whether you’re thinking about retirement, have already retired, or even looking to downsize your home, there is likely to be value in reviewing your circumstances and having a discussion with a financial adviser about how these super changes could benefit you.

Outlined below is a brief explanation of some of the key changes and how you could benefit.

What’s changing?

Individuals aged 67-74[1] will have greater opportunity to contribute to super with the following changes:

• the removal of the work test for personal (after-tax) contributions[2] and salary sacrifice contributions, and
• an increase to the amount of after-tax contributions that may be made within a single financial year.

To learn more about opportunities to add to super with proceeds of your home sale read our article here

[1] Contributions must be received no later than 28 days after the month in which the person turns age 75.

[2] Personal contributions include those for which you do not claim a tax deduction, spouse contributions and small business CGT amounts.

Removal of work test

Currently, the work test requires you to undertake work for at least 40 hours in a consecutive 30 day period in the financial year a super contribution is made. Alternatively, you may be eligible to apply the work test exemption.

This requirement is removed from 1 July 2022 for individuals aged 67-74¹ if making personal after tax² contributions and salary sacrifice contributions. The removal of the work test may make it easier for you to make contributions.

It is important to note that the work test (or work test exemption) still applies if you make a personal contribution and wish to claim a tax deduction.

Other eligibility requirements to make contributions continue to apply, such as total super balance limits and contribution caps.

Increasing limits on after-tax contributions

Caps apply to limit the total contributions that you can make to super. The current annual non-concessional contributions (NCC) cap is $110,000. NCCs include personal contributions for which you don’t claim a tax deduction

If you meet certain requirements, you may be eligible to ‘bring-forward’ NCCs from future financial years, to make even larger contributions. This is known as the ‘bring-forward rule’. If you’re eligible, you may be able to contribute up to $330,000 either in a single financial year or over a three year period.

Currently, you need to be less than 67 on 1 July of a financial year to be eligible to use the bring-forward rule. From 1 July 2022, you may be able to access the bring-forward rule if you’re aged less than 75 on the prior 1 July.

Other eligibility rules will continue to apply, such as the total super balance limits.

Speak to your financial adviser for more information on the changes and how they may provide opportunities for you.

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