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  • Writer's pictureMatthew Carberry

Budget super measures pass parliament

The Bill1 implementing the majority of the superannuation changes proposed in the 2021-22 Federal Budget has now passed both houses of parliament and awaits Royal Assent. As a result, the following key superannuation changes will apply (from 1 July 2022 unless otherwise noted) . Importantly, Regulations (yet to be made) are still required to complete the implementation of the changes to the work test for super contributions – see below for further information.

Changing work test requirements

Currently, a member aged 67 to 74 must satisfy a work test (or qualify for a work test exemption) to make voluntary super contributions (excluding downsizer contributions).

The Government proposed, in the May 2021 Federal Budget, removing the work test (or work test exemption) requirement for non-concessional contributions and salary sacrifice contributions from 1 July 2022. As the work test requirements are located in the SIS Regulations, the Government will need to make amending regulations to implement this change. At the time of writing, no regulations have been made for this purpose, although the Treasurer has indicated that the Government intends to do this by the end of the current financial year. While still to be clarified, the Bill’s Explanatory Memorandum indicates that the SIS Regulations work test requirements would not apply to any personal contributions, suggesting that once amending regulations are made, a superannuation fund will be able to accept any superannuation contributions from 1 July 2022 without work test requirements applying.

However, from 1 July 2022, the work test (or work test exemption) will still apply to personal tax-deductible contributions where a member is aged 67 to 746 . The Bill inserts a tax law requirement that, where a member wishes to claim a tax-deduction for a personal super contribution made while aged 67 to 747 , they must have:

  • satisfied the work test (40 hours of gainful employment in a period of 30 consecutive days or less) during the income year of the contribution, or

  • satisfied the work test exemption for the income year of the contribution

Importantly, there is no change to the maximum age for making voluntary superannuation contributions (excluding downsizer contributions), which remains at 28 days after the end of the month a member reaches age 75.

Increasing access to bring-forward rule

Currently, a member must be under age 67 at the start of a financial year in order to trigger the non concessional contributions cap bring-forward rule in that year.

From 1 July 2022, the maximum age for the bring forward rule will increase so that a member can trigger the bring-forward rule in a financial year where they are under age 75 at the start of the year. There is no change to the existing total superannuation balance requirements that limit or remove a member’s access to the bring-forward rule.

Lowering downsizer contribution age

From 1 July 2022, the minimum age to make a downsizer contribution (measured at the time of contribution) will reduce from 65 to 60. This will allow some members aged 60 to 64 to potentially contribute $630,000 (or $1.26 million combined in the case of a couple) at one time by combining a downsizer contribution with the three year non-concessional contributions bring-forward rule.

Increasing maximum release amount under First Home Super Saver (FHSS) Scheme

Where a request for a FHSS Scheme determination is made to the Commissioner on or after 1 July 2022, a member will be able to release up to $50,000 of eligible contributions (plus a deemed earnings amount) under the FHSS Scheme to purchase their first home. Currently the maximum release amount is $30,000 plus deemed earnings. However, there is no change to the annual voluntary contribution limit, which will remain at $15,000. This means that a member will need to make eligible contributions over at least four years to take maximum advantage of the scheme

Removing $450 monthly income threshold for SG purposes

Currently, where an employee earns less than $450 in a calendar month, their employer is not required to pay superannuation guarantee (SG) on those earnings. For SG quarters commencing 1 July 2022, this minimum SG threshold will be abolished and an employer will be required to pay SG on earnings less than $450 in a calendar month.

Giving SMSFs choice of segregation method

Prior to the passage of the Bill, where a superannuation fund (eg, an SMSF) had all assets fully supporting the payment of retirement phase income streams for only part of a financial year, the fund had to use the segregated pension assets approach to calculate its exempt income for that part of the income year (except where the fund has disregarded small fund assets) for that period. This treatment presented administrative complexity for SMSFs that moved from being partially or fully in accumulation phase to being fully in retirement phase part way through a financial year (or vice versa). From the 2021-22 financial year and future years, funds that have all assets fully supporting the payment of retirement phase income streams10 for only part of a financial year can choose to:

  • treat all of those assets as segregated pension assets for that part of the year, or

  • treat all of those assets as not being segregated pension assets for that part of the year

This choice will allow an SMSF to use the unsegregated approach to calculate the fund’s exempt income over a whole financial year where the fund is fully in retirement phase for part of that year. Note that an actuarial certificate is required where a fund uses the unsegregated assets approach. This choice will be made prior to the fund submitting its tax return. The choice is not a formal election and does not have to be submitted to the ATO, however trustees should keep a record of any choice and details of calculations used. This choice is not available in a financial year where a fund has assets that are disregarded small fund assets for the year (these assets cannot be segregated pension assets)

If you have any questions regarding the changes, please give us a call on 08 8120 4877 or email

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