The Federal Government handed down its Budget for the 2021-22 financial year on Tuesday with a number of superannuation changes of particular interest. To keep everyone updated we have complied what we think are the biggest changes affecting you:
Repealing the work test for non-concessional contributions and salary sacrifice contributions for people aged 67 to 74
The Government has announced it will allow individuals aged 67 to 74 to make or receive non-concessional or salary sacrifice superannuation contributions without meeting the work test, subject to existing contribution caps.
However, individuals aged 67 to 74 years wanting to make personal deductible contributions will still have to meet the existing work test.
This measure is proposed to have effect from the start of the first financial year after the enabling legislation receives Royal Assent. The Government stated it expects this to occur prior to 1 July 2022.
Benefit: Removing the work test for people aged 67-74 to make non-concessional contributions will provide more flexibility for retirees under 75 to top up their super without needing to work 40 hours within 30 consecutive days in a year prior to making a contribution.
Removing the $450 per month minimum superannuation guarantee threshold
The Government has announced it intends to remove the $450 per month minimum superannuation guarantee (SG) income threshold.
Under the current rules, an employer is not required to pay superannuation guarantee contributions for an employee who earns less than $450 per month.
This measure is proposed to have effect from the start of the first financial year after the enabling legislation receives Royal Assent. The Government has stated that it expects this to occur prior to 1 July 2022.
Benefit: Taking into account that two out of every three part-time workers are female, the SG threshold disproportionately impacts women who do a small amount of paid work, or who work multiple jobs each paying less than $450 per month. Younger workers combining part-time employment with full-time university study are also in the same situation. This will ensure those on smaller wages are still entitled to superannuation payments.
First Home Super Saver Scheme – increasing the maximum releasable amount to $50,000
The Government has announced it will increase the maximum releasable amount for the First Home Super Saver Scheme (FHSSS) from $30,000 to $50,000. Under the existing FHSSS rules, an eligible person can only apply to have up to $30,000 of their eligible (voluntary) contributions, plus a deemed earnings amount, released from super to purchase their first home.
This measure is proposed to have effect from the start of the first financial year after the enabling legislation receives Royal Assent. The Government has stated that it expects this to occur prior to 1 July 2022.
Personal income tax cuts – retaining the low and middle income tax offset for the 2021-22 income year
The Low and Middle Income Tax Offset (LMITO) was due to be removed at the end of the current financial year. However, the Government has announced it will retain LMITO for the 2021-22 income year. The LMITO provides a reduction in tax of up to $1,080. The table below shows the amount of offset an individual client is entitled to depending on their taxable income:
2021/2022 Taxable Income
Low and M
This year's budget does outline a number of other changes relating to aged care, SMSF changes, child care and business tax incentives. If you would like to discuss anything within this years budget please do not hesitate to contact Aston Financial.
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