Super reforms that didn’t happen in 2021
ARTICLE
01 February 2022
3 mins read
3 mins read
What reforms from last 2021 remain in proposal and what could affect them becoming law?
There were several superannuation measures announced by the government in the May Federal Budget 2021/22. Introduced as draft legislation on 27 October 2021 in the Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and helping Australian Business invest) Bill 2021, they remain unlegislated as we enter the new year. It may be important to understand what reforms remain proposed and what could affect these proposals becoming law.
Below are four notable areas in the draft legislation:
Removal of the $450 super guarantee threshold
Under Schedule 1 of the Bill, there are proposed amendments to the Superannuation Guarantee (Administration) Act 1992. This reform will allow eligible employees earning less than $450 per calendar month to receive Superannuation Guarantee (SG) contributions on these earnings. Remembering that from 1 July 2021 the SG rate has increased to 10% of earnings.
Under this draft legislation, SG will be provided to part-time employees previously not eligible to receive these contributions. However, as is the case currently, this will not include part-time employees under 18 years of age.
It is proposed that, if legislated, this will apply from 1 July 2022.
Increase in the amount accessible under the first home super saver scheme
Under current rules, qualifying first-home buyers can access up to $30,000 of certain contributions and associated earnings from their superannuation to purchase their first home. Under the proposed legislation, this amount will increase to $50,000. However, there is no proposed change to current eligibility criteria, including the annual contribution cap of $15,000 per year for eligible contributions. This proposal will allow would-be homeowners to access more of their savings through super over a longer period.
It is proposed that, if legislated, this will apply from 1 July 2022.
Reduced age requirement for downsizer contributions
The proposed legislation will lower the age requirement to 60 years of age, allowing older Australians to contribute up to $300,000 (or $600,000 as members of a couple) to superannuation from the capital proceeds of the sale of eligible residential properties. This legislation currently only applies to those aged 65 and over, and has been in place since 1 July 2018.
It is proposed that, if legislated, this will apply from 1 July 2022.
Removal of the work test requirements for non-concessional and salary sacrifice contributions
The proposed reform removes the requirement to satisfy the work test of ’40 hours in 30 consecutive days’ for members aged between 67 and 75 to make salary sacrifice and non-concessional contributions. If legislated, it would allow taxpayers between these ages to make eligible contributions irrespective of their actual working circumstances. As proposed, the current contribution caps and Total Super Balance rules would apply. However, those looking to make personal deductible contributions within this age cohort would need to continue to satisfy the work test requirements (or apply for the current work test exemption).
It is proposed that, if legislated, this will apply from 1 July 2022.
The year ahead
As we enter the new year, the earliest that Parliament is proposed to sit is 8 February 2022. However, at this stage the proposed legislation contained in the Bill has not been passed in the House of Representatives, nor has it been tabled in the Senate.
With this being an election year, it may have a bearing on the successful passing of this legislation. If an election is called and Parliament dissolves without the legislation passing both the houses of Parliament and receiving Royal Assent, this legislation would lapse. Any new legislation would need to be introduced into any future Parliament.
The TECE team will keep you update in the months ahead, with the progress of this legislation and the impact on future advice and strategies for your clients.
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