No work test for voluntary contributions extended to age 66

Effective 1 July 2020

The Government will amend the superannuation contribution rules to allow people aged 65 and 66 to make voluntary contributions to superannuation without meeting the work test. This will align the work test with the qualifying age for Age Pension (scheduled to reach 67 from 1 July 2023).

Under current legislation, for a client aged 65-74 to be eligible to a make a voluntary superannuation contribution they must have already satisfied the work test during the financial year the contribution is made. The work test is satisfied where a client has been gainfully employed for 40 hours in a period of 30 consecutive days during the financial year. Alternatively, from 1 July 2019 clients may instead satisfy the work test exemption to make voluntary contributions.

Voluntary contributions are all contributions other than employer contributions required under Super Guarantee law or an industrial award or agreement (ie mandated employer contributions).

Voluntary contributions that require the work test to be satisfied include:

* personal after tax (non-concessional) or tax-deductible (concessional) contributions
* voluntary employer contributions (eg. salary sacrifice that is not counted towards the employer’s SG obligations)
* spouse contributions made by the member’s spouse on their behalf.

Bring-forward rule extended to age 66

Effective 1 July 2020

People age under 67 at any time during a financial year (eg 65 and 66 year olds) will be able to trigger the non-concessional bring-forward rule.

Currently, clients must be under age 65 at any time during a financial year to trigger the bring-forward rule. The bring forward rule allows client to make up to three years’ worth of non-concessional contributions, which are capped at $100,000 a year, to their superannuation fund in a single year.

Spouse contributions extended to age 74

Effective 1 July 2020

Currently, to be eligible to make a spouse contribution, the receiving spouse must be under age 70 at the time of the contribution, and must meet the work test if they are between age 65 to 69.

Under the proposed changes, spouse contributions can be made where the receiving spouse is under age 75. In addition, where the receiving spouse is age 65 or 66 they no longer need to meet a work test. A receiving spouse will need to meet the work test from age 67.

Exempt current pension income calculation

Effective 1 July 2020

The Government has announced it will amend the Tax Act 1997 to allow the trustees of super funds, such as self-managed super funds, with interests in both the accumulation and retirement phases in a year to choose their preferred method of calculating ECPI.

Under current rules, a fund will be deemed to be utilising the segregated assets method during any period where 100% of the fund’s interests are in the retirement phase. This can lead to additional cost and complexity where a member makes a contribution part way through a year as it could result in the fund needing to use both the segregated and unsegregated methods in the one financial year.

The Government also announced it will remove the requirement for superannuation funds to obtain an actuarial certificate when calculating ECPI using the proportionate method where all members of the fund are fully in the retirement phase for all of the income year.

This announcement means trustees of SMSFs that are 100% in the retirement phase but which are precluded from utilising the segregated assets method (due to having disregarded small fund assets) will no longer need to obtain an actuarial certificate to calculate the fund’s ECPI.

Protecting Your Super Package – putting members’ interests first

Effective 1 October 2019

The Government has introduced a Bill to give effect to contentious elements of the Protecting Your Super measures which were excised from the original Bill (which has already been legislated).

These measures have been introduced in the Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019.

In summary, this Bill proposes to prohibit trustees from offering insurance on an opt-out basis for:

* new members under the age of 25 who open an account on or after 1 October 2019, and
* members with balances less than $6,000.

These measures are proposed to commence on 1 October 2019 if successfully legislated.

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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.