|Changes and actions
|Pre 30 June 2022
| Ensure that contributions are made and received by 30 June. If
contributions are by EFT, ensure that the contribution is recognised in the
fund’s bank account as at 30 June
Where applicable, ensure minimum pension payments have been withdrawn
from the fund’s bank account by 30 June
Review your fund’s investment strategy including the appropriateness of any
existing insurance held by the SMSF or the need for insurance coverage for fund
Rectify any outstanding compliance issues noted by your auditor
Paperwork is in place for any in-specie contributions made to the fund
|1 July 2022
| Superannuation guarantee increases to 10.5%
Reduction in age for ‘downsizer’ contributions to 60 from age 65
First home saver super scheme maximum voluntary contribution amount that is
available to be withdrawn increases to $50,000 from $30,000
Removal of the ‘work test’ for voluntary contributions – excluding personal
Minimum super guarantee threshold removed
|30 June 2023
| Relaxation of SMSF residency requirements
|1 July 2023
| Minimum pension amounts for super income streams return to default rates
SUPERANNUATION GUARANTEE INCREASES TO 10.5%
The Superannuation Guarantee (SG) rate will rise from 10% to 10.5% on 1 July 2022 and will then steadily increase by 0.5% each year until it reaches 12% on 1 July 2025.
What this will mean to individual members depends on their employment agreement. If the employment agreement states they are paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund. For those paid a rate plus superannuation, then their take home pay will remain the same, but they will benefit from the increase.
WORK-TEST REPEAL – ENABLING THOSE UNDER 75 TO CONTRIBUTE TO SUPER
Currently, a work test applies to superannuation contributions made by people aged 67 or over. In general, the work test requires that you are gainfully employed for at least 40 hours over a 30 day period in the financial year.
From 1 July 2022, the work-test has been removed and individuals aged younger than 75 years will be able to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice superannuation contributions without meeting the work test, subject to existing contribution caps and total super balance rules.
The work test will still apply to personal deductible contributions.
This change will also see those aged under 75 be able to access the ‘bring forward rule’ if your total superannuation balance allows. The bring forward rule enables you to contribute up to three years’ worth of non-concessional contributions to your super in one year.
DOWNSIZER CONTRIBUTIONS FROM AGE 60
From 1 July 2022, eligible individuals aged 60 years or older can choose to make a ‘downsizer contribution’ into their superannuation of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home. Prior to 1 July, you needed to be 65 years or older to utilise downsizer contributions.
Downsizer contributions can be made from the sale of your principal residence in Australia that you have owned for the past ten or more years. These contributions are excluded from the age test, work test, and your total superannuation balance (but not exempt from your transfer balance cap).
If you are looking to make a downsizer contribution, please ensure your trust deed allows it
FIRST HOME SAVER SCHEME – USING SUPER TO SAVE FOR A FIRST HOME
The First Home Super Saver Scheme enables first home buyers to withdraw voluntary contributions they have made to superannuation and any associated earnings, to put toward the cost of a first home. The benefit of this scheme is the concessional tax treatment of superannuation.
From 1 July 2022, the maximum amount of contributions that can be released from superannuation will increase from $30,000 to $50,000. The maximum amount of contributions that can be released each year is $15,000 totalling $50,000 across all years.
The FHSS does not apply to investment properties – only a first home the individual intends to live in.
$450 SUPER GUARANTEE THRESHOLD REMOVED
From 1 July 2022, the $450 threshold that limits superannuation payments to those that earn $450 or more per month will be removed. This means that employers will need to pay all employees aged 18 or over superannuation guarantee regardless of how much they earn.
For employees under the age of 18, super guarantee is only required if the employee works more than 30 hours per week.
WHAT IS STAYING THE SAME
MINIMUM PENSION REDUCTION FOR SUPER INCOME STREAMS EXTENDED
The temporary 50% reduction in superannuation minimum drawdown requirements for account-based pensions and similar products has been extended to 30 June 2023.
|Default minimum drawdown rates (%)
|Reduced rates by 50% for the 2019-20 to 2022-23 income years (%)
|95 or more
CONCESSIONAL AND NON-CONCESSIONAL CONTRIBUTION CAPS
The concessional contribution cap for the 2022-23 financial year will remain at $27,500. Concessional contributions are contributions made into your super fund before tax such as superannuation guarantee, salary sacrifice or personal deductible contributions.
You may be able to utilise your concessional contributions cap to make a personal deductible contribution of up to $27,500 (less any employer contributions) plus any unused amounts back to 1 July 2018 if you meet the eligibility for the carry forward unused concessional contributions (see Carry forward unused concessional contributions below). This can save you tax and may be particularly beneficial if you have higher than usual income such as a capital gains.
The non-concessional cap will remain $110,000 for the 2022-23 financial year. Non-concessional contributions are after tax contributions made into your super fund.
The bring forward rule enables those under the age of 75 (age 67 prior to 1 July 2022) to contribute three years’ worth of non-concessional contributions to their super in one year. That is, you may be able to contribute up to $330,000 in one year depending on your total superannuation balance.
|Total Superannuation Balance (TSB)
|Contribution and bring forward available
|Less than $1.48m
|$1.48m – $1.59m
|$1.59m – $1.7m
CARRY FORWARD UNUSED CONCESSIONAL CONTRIBUTIONS
If members have unused concessional contributions, that is, they did not contribute the full concessional contribution cap in 2018-19, 2019-20, 2020-21 or 2021-22, then they can carry forward these amounts for five years on a rolling basis if their total superannuation balance is below $500,000 on 30 June (of the year you intend to access the unused amount).
For example, if a member’s total concessional contribution in the 2021-22 financial year was $10,000 and they meet the eligibility criteria, then they can ‘carry forward’ the unused $17,500. They may then be able to make a higher deductible personal contribution in a later financial year. If they are selling an asset and likely to make a taxable capital gain, a higher deductible personal contribution may assist in reducing their tax liability in the year of sale.
- Your total superannuation balance must be below $500,000 on 30 June of the prior year before you utilise any carried forward amount (within the 5 year term); and
- In some cases, an additional 15% tax can apply (30% total) to concessional contributions made to super where income and concessional contributions exceeds certain thesholds (250,00 in 2021-22). Your income could be higher that usual in the year when you sell an asset for a capital gain.
This is an excellent concession to help you top up your superannuation.
YOUR PERSONAL TRANSFER BALANCE CAP
The transfer balance cap (TBC) limits how much money you can transfer into a tax-free retirement account. From 1 July 2021, the general TBC increased from $1.6m to $1.7m but your personal cap depends on your circumstances.
The Australian Taxation Office (ATO) calculates your personal TBC based on the information lodged with them (this is available from your myGov account linked to the ATO). If your superannuation is in retirement phase, it is important to ensure your Transfer Balance Account compliance obligations are up to date. If any changes have occurred within your SMSF, for example if a member of your fund has retired, it is essential that you let us know so we can manage the reporting requirements.
DIRECTOR ID REGISTRATION DEADLINE LOOMING
The new director ID regime was introduced to prevent the use of false and fraudulent director identities and to reduce unlawful activity, such as phoenix activity.
All directors who are subject to the regime will apply for a director ID once through the Australian Business Registry Services (https://www.abrs.gov.au/director-identification-number ) and keep this ID for their lifetime, regardless of whether they change companies, stop being a director or move overseas.
When an individual must apply for a director ID depends on when they become a director:
For Corporation Act Directors:
|Date you become a director
|Date you must apply
|On or before 31 October 2021
|By 30 November 2022
|Between 1 November 2021 and 4 April 2022
|Within 28 days of appointment
|From 5 April 2022
The ABRS has confirmed that if an individual was already a director on or before 31 October 2021 then they have until 30 November 2022 to apply, even if they become a director of another company after 31 October 2021.
For CATSI (Corporations (Aboriginal and Torres Strait Islander) Act 2006) directors:
|Date you become a director
|Date you must apply
|On or before 31 October 2022
|By 30 November 2023
|From 1 November 2022
If your company intends to appoint new directors, it is important to ensure that the requirements and timeframes to establish their director ID are met.
All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will need a director ID. This includes directors of a corporate trustee of self-managed super funds (SMSF). Individuals will need to obtain a director ID if they are a director or eligible officer of any of the following entities:
- A company;
- An Aboriginal and Torres Strait Islander corporation;
- A corporate trustee, for example, of a self-managed super fund;
- A charity or not-for-profit organisation that is a company or Aboriginal and Torres Strait Islander corporation;
- A registerd Australian body, for example, an incorporated association that is registered with the Australian Securities and Investments Commission (ASIC) and trades outside the state or territory in which it is incorporated;
- A foreign company registered with ASIC an Carrying on business in Australia (regardless of where the individual lives).
The introduction of the director ID regime is part of the Government’s Modernisation of Business Registers (MBR) Program. The MBR will unify the Australian Business Register and 31 ASIC business registers, including the register of companies. In effect, the system will create one source of truth across Government agencies for individuals and entities and will be managed by the ATO.
For those concerned about their privacy, the director ID will not be searchable by the public and will not be disclosed
without the consent of the director.
The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.