From 1 July 2022 the Australian government will implement welcome changes to legislation that will enhance superannuation outcomes for Australians. The changes affect non-concessional contributions (NCCs) which are personal contributions to super made from after-tax income, and downsizer contributions. They include:
- Extending the non-concessional contribution (NCC) bring-forward age limit
- Increasing the non-concessional contribution (NCC) cap for individuals and couples
- Reducing the downsizer contribution eligibility age
- Partially removing the work test and work test exemption
By taking advantage of these changes, Australians can make a significant difference to their superannuation balances in the years leading up to retirement, and enjoy the benefits of a more comfortable lifestyle post-retirement.
Extension of the non-concessional contributions (NCC) bring-forward age limit
Non-concessional contributions (NCCs) are personal super contributions that are made using after-tax income and are not taxed in your super fund. The cut-off age for accessing the NCCs bring-forward rule will be increased to 75 years of age (previously 67 years of age).
Increase to non-concessional contributions (NCC) cap/limit
The non-concessional contributions cap has been increased to $330,000 for an individual and $660,000 for a couple. This was previously restricted to $110,000 for an individual. Super balances above $1.48 million will continue to be subject to existing restrictions.
Reduction of the eligibility age for downsizer contributions
Eligible individuals aged 60 or older can now make downsizer contributions (previously only available to people aged 65+). Downsizer contributions are superannuation contributions made from the proceeds of the sale of the primary residence/home. The maximum downsizer contribution cap remains at $300,000 per person.
Partial removal of the work test and work test exemption
The existing work test and the 'work test exemption for recent retirees' will no longer be required for people aged 67 to 75 who salary sacrifice or make non-concessional contributions. Individuals in this age range wishing to claim a tax deduction for their personal contributions will still be required to meet the work test or recent retiree exemption.
To find out more about how to take advantage of these changes to maximise your retirement income, speak to your financial advisor today on 1800 333 143.
This material contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.