Big Changes to Superannuation
There are some big changes to super happening in the coming months.
Here are three of the key changes.
1. GIVING CASUAL & PART-TIMERS A GO
From July 1 the $450 monthly income threshold that workers currently need to earn before they’re eligible for compulsory employer super contributions will be removed.
This means a large number of casual and part-timers will now be eligible for compulsory employer super contributions.
As the part-time share of employment is over 30% in Australia, this has been widely welcomed by the super industry and is estimated to help about 300,000 people, mostly women.
2. GOING TO 10.5 PERCENT
On 1 July 2022 the super guarantee rises to 10.5 percent.
This is important to know because if you do not pay an employee's minimum superannuation guarantee amount on time and to the right fund, you must then pay the superannuation guarantee charge (SGC) and lodge an SGC statement to the ATO.
The SGC is more than the super you would have otherwise paid to the employee's fund and is not tax deductible.
3. FLEXIBILITY FOR SENIORS
Other recent legislation passed removes the work test for super contributions for 67-75 year-olds.
Previously people aged 67 to 74 were prevented from contributing to super unless they were employed.
The new legislation means 67-74 year-olds no are no longer required to meet the 40-hour work test, provided their contributions are made via salary sacrifice contributions.
It’s important to note that people aged between 67 and 75 who wish to make personal deductible contributions to super will still be required to meet the 40-hour work test.
Another law change lowers the age threshold for the super downsizer scheme from 65 to 60.
Downsizer contributions are made to super funds from the proceeds of selling your home. The reduction in the age threshold provides greater flexibility for older Australians to contribute to their super.
There is a nil cashing condition applied to downsizer contributions, which means funds must be preserved within the super account until conditions of release are met. For more information about downsizing, visit ato.gov.au.