Easing of restrictions around Superannuation
Australians can look forward to more opportunities to top up super balances as they approach retirement and beyond.
Has the Work Test really been abolished?
From 1 July 2022 Australians will no longer need to meet the work test to be eligible to make non-concessional superannuation contributions and receive salary sacrifice contributions.
Individuals aged 67-74 years will still have to meet the work test to make personal deductible contributions.
Currently individuals aged between 67-74 years of age are restricted from making certain contributions unless they are working at least 40 hours in a 30 day consecutive period, which is known as the work test.
From 1 July 2022, Australians over 60 years of age will be eligible to make downsizer contributions. Previously the downsizer contribution was limited to Australians over age 65. The other eligibility criteria for the downsizer contribution remain unchanged.
Originally introduced in the 2018 Budget, people aged 65 and over were allowed to sell their own home if they had owned it for at least ten years and then make a one off contribution of up to $300,000 into superannuation.
The government is proposing to open up the age for eligibility to include those from age 60 in order to free up stock and create movement in the property market.
Self Managed Superannuation Funds (SMSFs) & residency
SMSFs have long been disadvantaged from a tax perspective where SMSF members are absent from Australia for extended periods of time. In this budget the Government proposes to relax the rules such that the SMSF and members now only need to meet two rules to be eligible for concessional tax treatment:
- The fund must be established in Australia or hold an asset in Australia
- The members cannot be temporarily absent from Australia for more than five years.
This will enable SMSF members to be absent from Australia for longer than is currently the case, whether for work, education or due to COVID-19. It will also enable overseas members to continue to contribute to their Australian SMSF without penalty within the five year period. This is expected to apply from 1 July 2022.
Individuals will be allowed to exit certain Legacy Retirement Products including Market Linked Pensions within a two year window from the first financial year after the date of Royal Assent.