Super opportunities for 2022/23

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Although the Federal Budget did not bring in any noteworthy superannuation changes except for the extension of the halved minimum drawdown rates, recent changes relating to the work test and contribution rules have been quite significant, especially for clients aged 67 to 74.

This paper provides a recap of all the recent superannuation changes that open a range of opportunities for your clients.

Significant contribution related changes

There have been a number of changes to superannuation contribution rules since the superannuation reforms on 1 July 2017. Figure 1 summarises these changes from 2017 to 2022.

Figure 1. Changes to superannuation contribution rules

Work test changes coupled with non-concessional contribution opportunities

From 1 July 2022, individuals aged 67 to 74 will be able to utilise the bring-forward provisions-they must be 74 on 1 July of the financial year in which the contribution is made-as well as contribute non-concessional contributions (NCCs) without meeting the work test or work test exemption. This can present a significant opportunity for clients in this age group as prior to 1 July 2022 there were limited opportunities to contribute large amounts to their superannuation.

Under the changes, individuals will also be able to make certain other contributions like spouse contributions-which count towards the receiving spouse's NCC cap-and contributions using the small business capital gains tax (CGT) cap-which is excluded from the NCC cap-if eligible, without meeting the work test until age 74.

Unlike the current rules, clients triggering the bring-forward provisions at 74 from 1 July 2022, but not using the entire available cap, will not be able to contribute the remaining amount once they turn 75.

Note that the removal of the work test rules does not extend to personal deductible contributions.