There are a large number of changes to the superannuation legislation that commence on 1 July 2022.
Below is our summary of these upcoming changes and how they may impact you in addition to a reminder about the 2022 financial year contribution caps.
Changes Impacting Employers & Employees from 1 July 2022
Superannuation Guarantee Rate Increase
The superannuation guarantee rate will be increasing from 10% to 10.5% of gross wages effective 1 July 2022.
Please note this rate will need to be updated in your payroll software in time for this start date. For employers using Xero to manage their software this will happen automatically, however, MYOB users will need to review the payroll settings for each employee.
Any employees who are paid a super-inclusive salary or hourly rate will be impacted by this change. Without any pay increase, they will effectively be receiving a pay cut as their normal net wage amount should decrease.
If you are an employer, we recommend you review your employee remuneration and accounting software payroll settings/pay templates to confirm how this increase will impact your employee pays.
Superannuation Guarantee for Part-time Workers Earning < $450 per Month
From 1 July 2022, employees earning less than $450 per month from a single employer will now be entitled to superannuation guarantee on all gross wages.
This will not have a large impact on most employers whose employees already earn over the above threshold.
Changes Impacting Individuals from 1 July 2022
Removal of the Work Test for Individuals Aged Between 67-74
Satisfaction of the work test for voluntary non-concessional and salary sacrificed superannuation contributions for those aged 67 to 74 will no longer be required from 1 July 2022.
The work test will still apply to individuals aged 67 to 74 seeking to claim concessional personal deductible contributions.
To meet the work test, you must be gainfully employed for at least 40 hours during a consecutive 30-day period in the financial year in which the contributions are made.
Additional Contributions/Withdrawals Available Outside Ordinary Cap Restrictions
First Home Super Saver Scheme
From 1 July 2022, the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme will increase from $30,000 to $50,000.
Expansion of Superannuation Downsizer Contributions to Individuals Aged >60
Under the downsizer measure, individuals can choose to make a one off contribution of up to $300k to super from the proceeds of selling their home. This is in addition to the normal contribution caps that would otherwise apply and is expected to apply from 1 July 2022.
This measure previously only applied to individuals over the age of 65 but the age threshold will be lowered to people over the age of 60 thus expanding the eligibility to a wider demographic.
Relaxation of the SMSF Residency Requirements
From 1 July 2022, self-managed superannuation fund (SMSF) members will be allowed to continue making superannuation contributions whilst temporarily overseas.
At present, individuals who have temporarily relocated overseas can only make contributions to large retail funds due to restrictions for SMSFs around residency requirements.
Note: This was a budget measure announced by the former government and has not yet been legislated at the time of writing.
Minimum Pension Requirements
Certain superannuation pensions and annuities are subject to rules that determine minimum and maximum amounts to be paid in a financial year.
A minimum amount must be paid each year for pensions or annuities you commence on or after 1 July 2007.
On 25 March 2022, the government announced a further extension to the temporary reduction in superannuation minimum drawdown rates. The Regulations supporting this measure were registered on 1 April 2022.
This means that you will be able to continue to take advantage of the 50% temporary drawdown reduction from 1 July 2022 to 30 June 2023.
The minimum pension requirements for the year ended 30 June 2023, based on your age as at 1 July 2022 and calculated as a % of your pension account balance as at 30 June 2022, are as follows:
Please contact us if you are unsure of your minimum pension withdrawal amount for the 2022 financial year.
2022 Financial Year Superannuation Contribution Caps
We advise contributions are generally counted towards your contribution caps in the year the superannuation fund receives the contribution (not the date it is paid nor the period it relates to).
If you are looking to maximise your superannuation contributions for the year ended 30 June 2022 and would like to confirm if this would be tax effective and how much you can contribute, please contact our office.
Concessional Contributions Cap
For the year ended 30 June 2022 the concessional contributions cap is $27,500.
Please note that the cap amount of $27,500 includes the total of the following:
- Employer super contributions including:
- superannuation guarantee amounts
- salary sacrifice contributions
- employer additional contributions
- Member concessional contributions (voluntary contributions for which a deduction is claimed)
From 1 July 2018 if you have a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may be entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts.
The first year you will be entitled to carry forward unused amounts is the 2019–20 financial year. Unused amounts are available for a maximum of five years, after which they will expire.
The ATO keeps a record of your unused concessional contributions each year which we can advise you of.
Note: the concessional cap will remain at $27,500 for the financial year ending 30 June 2023.
Non-concessional Contributions Cap
For the year ended 30 June 2022 the non-concessional contributions cap is $110,000.
There is also a three (3) year bring forward rule available, potentially increasing this cap to $330,000, provided certain conditions are met.
There are several restrictions to consider before confirming eligibility to make non-concessional contributions (e.g. your total superannuation balance, age and whether you satisfy the work test).
Note: the non-concessional cap will remain at $110,000 for the year ending 30 June 2023.
Please contact our office for further assistance regarding any of the above measures including advice regarding any superannuation contributions you are looking to make prior to 30 June 2022.