Superannuation & Payroll Update 25th March 2022

Legislation was recently passed that may open some superannuation planning opportunities from 1 July 2022. Importantly these will also have an impact on Superannuation Guarantee Contributions (SGC) that all employers will need to be aware of (see points 5 & 6). A summary is provided below.

1. Work Test Amended

The work test has been removed for non-concessional contributions up to age 75. It still applies for deductible contributions. This is good news for those aged 67-74 who want to increase their super balance towards the tax-free pension cap of $1.7m.

2. Bring Forward Provisions

In line with point 1, the ability to use bring forward provisions and contribute up to 3 years cap space at once ($330,000) has been extended up to age 75, subject to not exceeding the $1.7m cap.

3. Downsizer Age Reduced

Eligibility has been reduced to 60 from 65. You can contribute up to $300,000 from the sale of a principal residence held for at least 10 years. The contribution must be within 90 days of settlement. It should be noted that this can still be done even if your balance exceeds the $1.7m cap that exists for non-concessional contributions.

4. First Home Super Saver Scheme

Maximum authorised drawdown has been increased from $30,000 to $50,000.

5. SGC Low Level Cap Removed

The $450 low income level cap will cease so SGC will need to be paid on all wages including monthly amounts under $450.

6. SGC Rate Increased to 10.5%

A reminder that SGC rate increases to 10.5% from 1/7/22 so payroll settings will need to be adjusted for points 5 & 6 from 1/7/22.

If you need any advice on superannuation matters, please contact our office as we can assist in developing strategies to maximise the tax benefits that superannuation provides.

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.