20 Eastern Shore Sun FEBRUARY 2022
A FINANCIAL MOMENT
Proposed super changes for 2022 present opportunities Damian Gibson, Partner, Elevate Wealth* AS part of the 2021–22 Federal Budget, the Government announced some promising changes to superannuation rules. The Government has introduced the ‘Treasury Laws Amendment (Enhancing Superannuation for Australians and Helping Australian Businesses Invest) Bill 2021’, which sets out the proposed changes. One of the main intentions of the Bill is to make it easier for older Australians to contribute to their superannuation. From the view of a financial adviser, the proposed changes are welcomed and present a raft of superannuation opportunities for individuals. Here we will discuss a few of the proposed changes. Removal of the work test
If you are aged 67 and want to make voluntary member contributions to your super, you must currently meet the work test criteria (or work test exemption). The work test requires you to be gainfully employed for a minimum of 40 hours over a consecutive 30-day period during a financial year. The Bill seeks to abolish the work test for individuals aged between 67 and 74 for nonconcessional contributions and salary sacrifice contributions from 1 July 2022. If approved, this will also extend to government cocontributions and receiving spousal contributions. Unfortunately, at this stage the Bill does not intend to remove the work test for personal contributions which you can claim a tax deduction (Personal Deductible Contributions).
Extending the bring forward rule to under age 75 Currently, a member of a super fund under the age of 67 can ‘bring forward’ two years of non-concessional contributions and make a total contribution of $330,000 into their super fund (subject to their total super balance). The Bill is seeking to extend this age so the bring forward rule can be used for members who are 74 or younger at the start of the financial year from 1 July 2022. For those members turning 75 in the financial year, they have until the 28th day of the month after their birthday to employ the bring forward rule. Reducing the downsizer contribution age Currently, individuals selling their primary residence may be eligible to make a downsizer contribution to super of up to $300,000.
To make a downsizer super contribution you must satisfy several conditions, one of which requires you to be aged 65 or over at the time of making the contribution. The Bill seeks to lower the downsizer contribution age from 65 to 60 from 1 July 2022. It is important to note that all other existing conditions still need to be satisfied prior to making a downsizer contribution.
This assumes legislation is passed and all other conditions are satisfied. Superannuation legislation is forever changing and can be hard to keep up with. As always there is devil in the detail and
conditions that will still need to be met if the changes become law. If you think these proposed changes may benefit your situation, talk to a financial adviser today and get on the front foot.
*Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.
Getting more into super Assuming the bring forward rule age is extended and the downsizer rule age is reduced, individuals will have significant opportunities to make large lump sum contributions into their super funds. An individual aged between 60 and 74 would have the ability to contribute up to $630,000 to their super, and a couple would have the ability to contribute $1,260,000.
Start 2022 on the front foot
Hank Jongen, General Manager Services Australia
THE start of a new year can be a great time to reset yourself and your finances. Here are some simple things you can do to set yourself up for 2022. First, check and update your Medicare bank details. This may seem obvious, but if you
haven’t told Medicare about your new bank details they aren’t able to pay you the benefits you’re owed. The easiest way to update your bank details is online through your Medicare account linked to myGov, or in the Express Plus Medicare app. Once you’ve given your new bank details, any refunds you’re owed will be paid to you
automatically. Next, in the same vein, check and update your income and asset details with Centrelink. This is something you can do anytime through myGov or the Express Plus Centrelink app. By doing it at the beginning of January, you’ll help ensure you’re paid the right amount of your payment from Centrelink. Third, check for any
lost superannuation. You can search for any lost super with the ATO by logging into your myGov account and clicking on ‘Manage my super.’ If you can’t access ATO online services, you can call them on 132 865. You’ll be asked some questions and will need to give your tax file number, so be ready when you contact the ATO.
Lastly, it’s a good time to check on how your budget is going. A budget is a great way for you to take control of your spending and take advantage of some savings that might become available. An easy place to start is to look at last year’s credit card statements to see where your money is going. The Moneysmart website, moneysmart.
gov.au, gives five steps to create a budget: 1. Record your income – how much is coming in and when. 2. Add up your expenses – the essential items you need to pay for to live. 3. Set your spending limit – the money you have for ‘wants’. 4. Set your savings goal – how much you
want to save. 5. Adjust your budget – it changes as your lifestyle changes. You can also find out more about budgeting on our website, where you’ll find the ‘Simple Money Manager’ tool This helps you see how much money you have coming in and going out. You can find the tool by searching for ‘budget’ on our website, servicesaustralia.gov.au
