Need to know

The Treasury Laws Amendment (Enhancing Superannuation for Australians and Helping Australian Businesses Invest) Bill 2021 was introduced into the House of Representatives on 27 October 2021.

If passed, from 1 July 2022, the measures will:

• Introduce a ‘work test’ for personal deductible contributions (only) in anticipation of the removal of the work test under SIS regulations. If this measure and the anticipated removal of the work test under SIS regulation becomes law, then clients aged between 67-74 will no longer be required to satisfy the work test or work test exemption to make non-concessional contributions or salary sacrifice contributions.

• The abolition of the work test for non-concessional and salary sacrifice contributions and the extension of the bring forward non-concessional contribution cap for those age less than 75 will allow more older Australian’s opportunities to increase retirement savings held in super. Note contributions may still be received within 28 days after the month in which the member turns 75.

• The Bill will extend the non-concessional contribution (NCC) bring forward rule to clients under age 75 (subject to their total super balance).

• Currently only clients less than 67 at any time in the income year can bring forward up to two years of non-concessional contributions subject to their total super balance. Advisers can plan when the bring forward cap should be ‘triggered’ to maximise non-concessional contributions. 

• Remove the Super Guarantee exemption for employees earning less than $450-a-month. If legislated it is anticipated that the change will take effect from 1 July 2022. If the Bill receives Royal Assent after 1 July 2022 the change will take effect from the start of the next quarter.

• Employers will need to begin paying Super Guarantee to employees earning less than $450 a month.

• Increase the limit on the amount of voluntary contributions made over multiple financial years that are eligible to be released under the First Home Super Saver Scheme (FHSSS) from $30,000 to $50,000 (plus associated earnings). If legislated the change will take effect from 1 July 2022.

• First home buyers can save more towards a deposit for their first home through the FHSS Scheme over a longer period. The $15,000 per financial year limit for eligible FHSS Scheme contributions remains the same.

• Lowering the minimum age before which a client can make a downsizer super contribution from age 65 to age 60. If legislated the change will take effect from 1 July 2022. 

• Provides clients who are age 60 or over with more flexibility in timing the sale of their home to downsize the home or free up equity. To be eligible to make a downsizer super contribution there are several requirements. See our Strategy Guide – Downsizer contributions for details.

• Super fund trustees will be able to choose their preferred method of calculating exempt current pension income where it holds both accumulation and retirement phase interests for part, but not all of the income year. It is intended for this change to apply for the 2021-22 income year and later income years.

• This will provide superannuation trustees with greater choice in how they calculate exempt current pension income and minimise the complexity and cost in a fund’s reporting.