The new super rules that took effect on July 1, 2022 present an opportunity to review your financial plans and assess how these rules may affect you both in the short- and the long-term. This consideration may help to alleviate any unwelcome surprises down the track.

For example, many of our clients have been surprised to learn that superannuation left to adult children on their passing could attract a 17% tax rate.

Here are just a few of the superannuation rules that may require your attention.

The increase in age limit for voluntary super contributions

From 1 July 2022, anyone aged 67 to 74 who wishes to make a non-concessional, voluntary super contribution is no longer required to meet the work test (or work test exemption) to be eligible to make the contribution.

There is one exception for people wishing to make a personal contribution into their super account and then claiming a tax deduction for the contribution. This type of personal concessional contribution still requires the contributor to meet the work test.

The new work test specifies that you must have worked at least 40 hours over 30 consecutive days in the financial year. This work test can be met any time in the financial year the contribution was made.

This presents a potential planning opportunity if you are looking to leave your funds accumulated in superannuation to your adult children upon your passing.

We recommend that you contact your superannuation fund to enquire about how this tax would affect you in the scenario that you do pass and leave your superannuation to your adult children.

The increase in age limit for salary-sacrifice contributions

From 1 July 2022, the age limit for making salary-sacrifice contributions into super without needing to meet the work test has been increased from age 68 to 74. This means eligible salary-sacrifice arrangements into super are available to anyone aged under 75 without the need to meet a work test.

The increase in Super Guarantee percentage

The percentage rate for the Super Guarantee (SG) increases from 10% to 10.5% from 1 July, 2022. This rate will continue to rise 0.5% each year until it reaches its final rate of 12% on 1 July 2025.

We recommend reviewing your employment contracts and ensuring that your payroll settings and systems are in place to ensure that the SG rate is increased appropriately each financials year.

The removal of $450 monthly SG threshold

As of 1 July 2022, the $450 monthly minimum wage threshold to qualify for employer Super Guarantee contributions was abolished. This means that as an employer, you are now required to make super contributions for all your employees (including casual and part-time) regardless of how much they earn.

The only exceptions to this are employees aged under 18 and working less than 30 hours per week.

If you would like us to help review your short or long term financial goals in line with these super changes, please contact us on 02 6566 2200.