New Changes Coming to Super on 1 July 2022
Two Main Changes Individuals between the ages of 67 and 74 may see some important changes coming to super beginning 1 July 2022. These changes focus on 2 primary components: 1. Work test changes: if you meet certain qualifications, the work test may be removed for after-tax contributions or salary sacrifice contributions. 2. After-tax contributions changes: increases in limitations for after-tax contributions for a single fiscal year. Sydney financial planners recommend discussing these new rules with a certified financial planner to see if changes will apply to you.
Work Test Removal Current policies require an individual to be working for at least 40 hours per week during at least 30 consecutive days within the financial year in which they make the super contribution. If an individual does not meet these requirements, they may be able to apply for a work test exemption. As of 1 July 2022, this requirement will be removed for those between the ages of 67 and 74. This only applies to those making salary sacrifice contributions or personal after-tax contributions. Sydney financial planners note that if you meet the qualifications above, these changes to the work test may make super contributions easier. However, if you want to claim tax deductions or make personal contributions, the work test or work test exemption will still apply. Other eligibility requirements for super contributions will continue to apply. This includes yearly contribution caps and limits on your total super balance. Talk to Sydney financial planners to see if you meet these eligibility requirements.
After-tax Contributions changes There will continue to be a cap on the total contributions you make to super. Currently, the cap for the non-concessional contributions (NCC) is $110,003. These NCCs include personal or spousal contributions when you do not claim a tax deduction and limitations on transfers from overseas super funds.
Changes to this cap are coming on 1 July 2022. If you meet the new age requirements, you may qualify for the 'bringforward rule.' This allows you to 'bring-forward' NCCS from future years and apply them to the current financial year. This allows you to make larger contributions. Under the new rules, you may be able to contribute up to $330,000 between a one-year and three-year period of time. Current rules require you to be under the age of 67 before 1 July to qualify for the bring-forward rule. However, on 1 July 2022, the qualifications will change to under the age of 75 before 1 July 2022. Other eligibility rules will still apply, including the total super balance limits. Sydney financial planners are ready for these changes and recommend discussing them with one of their team members to see if you qualify.