Federal Budget: This Superannuation Change Is Pretty Amazing

Federal Budget: This Superannuation Change Is Pretty Amazing

 

This is relevant for those who have an SMSF or a super fund.

 

When it comes to contributions, there's an age limit in which you can contribute your Super into. 

Now, in the 2021 federal budget, they’ve updated this one rule called the work test rule. If you're 67 years old, you couldn't contribute into Super if you're not working a certain amount of hours in a week or month. Now they're going to scrap that rule. Essentially, it doesn't matter whether you work or not, you will be able to make that contribution. 

 

So what that releases is this ability for you to put in more contribution into the Super fund. Now this only applies to the non-concessional after tax contributions and salary sacrifice contributions itself. So what that means is if you're 67 and you have to go back and prove that you work to make further contributions into your Super fund, you don't have to do that. This is from 1st of July, 2022. You have to wait a little bit for this but I would start planning that because if you're thinking, "Oh my gosh, I better put as much as I can to Super before I turn 67," July 2022, that opens up. Well, assuming that it doesn't change by then, it will open up, and it means that you can contribute more to Super, And the reason for this is also to kind of battle the costs of age care and also age pension that the government kind of bears. They're trying to give more and more incentive for people to put money into their own Super funds, to get a tax benefit. And that's the big thing here. It's essentially the tax benefit that you get when you contribute to Super as a tax deduction. Amazing rule.