BUDGET 2022 – My SMSF

By March 31, 2022 Blogs

Here are some of the big changes that will impact My SMSF members, following the release of the 2022 Budget by Treasurer Josh Frydenburg.

Superannuation Guarantee ( SGC) will increase to 10.5%

The Superannuation Guarantee (SG) rate is currently 10% of the incomes of most Australians. The government has proposed that from 1 July 2022, the SG rate will increase to 10.5% and will continue to rise by 0.5 percentage points each year until it reaches 12% by July 2025.

Minimum pension drawdowns for retirees

The 50% reduction to minimum super pension drawdown requirements has been extended for retirees to the 30th of June 2023.

Work Test. For Super Members aged 67 and 74 years

Currently the work test requires a person to be employed for at least 40 hours in a 30 day consecutive period, during the financial year, before any super contributions can be accepted for concessional or non-concessional contributions. The government has proposed that the existing work test will be abolished on 1 July 2022, however the work test will continue to apply where an application to make personal deductible contributions is made.

First Home Super Saver Scheme ( FHSSS) Changes

The maximum withdrawal from the First Home Super Saver Scheme (FHSSS) will be increased from $30,000 to $50,000.

This scheme allows people to make voluntary contributions to superannuation to save for their first home. The current caps on these contributions are $15,000 a year and $30,000 in total.

Under the proposed changes, voluntary contributions into a super fund will be allowed by a post-tax contribution or through salary sacrificing, up to a maximum of $50,000 in total. For couples, both individuals will be able to utilise their caps up to a maximum of $100,000.

This scheme relates to voluntary contributions only. First home buyers cannot withdraw any part of their compulsory super savings – that is, super contributions made on their behalf by their employer.

Key super rates and thresholds for 2021-22:

  • Concessional (before-tax) contributions cap is $27,500
  • Non-concessional (after-tax) contributions cap is $110,000
  • General transfer balance cap is $1.7 million

Extending access to downsizer contributions From 1 July 2022,

The government has proposed that the minimum age for the downsizer contribution will be lowered from 65 to 60. This will allow Australians nearing retirement to make a one-off post-tax contribution of up to $300,000 per person (or $600,000 per couple) when they sell their family home. This improves the flexibility for Australians to contribute to their superannuation savings, and may encourage people to downsize sooner and increase the supply of family homes. Downsizer contributions can be made after the sale of a person’s principal place of residence, held for a minimum of 10 years. Downsizer contributions do not count towards the concessional and non-concessional contributions caps. People with balances over the transfer balance cap (which is $1.7 million from 1 July 2021) are also able to make a downsizer contribution, however the downsizer amount will count towards that cap, when savings are converted to a pension.

Cost of living tax offset

Eligible individuals will receive a one-off $420 cost of living tax offset.

Cost of living payment

Eligible social security recipients and concession card holders will receive a $250 tax-exempt payment for individuals and $500 for couples. This automatic payment is expected to be made in April 2022.

 

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