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The biggest contribution changes in a decade

Investing 101

Both houses of Parliament quietly passed what may well be the biggest changes to super contribution rules in a decade. With the Treasury Laws Amendment Bill only awaiting Royal Assent (that is, from the Governor-General, which is a mere formality), 2022 will see retirees and soon-to-be retirees provided with significantly greater flexibility in putting additional cash into superannuation.

The most important and powerful change will be the near-abolition of the work test from 1 July 2022. Applying to those aged between 67 and 75, anyone seeking to make concessional and non-concessional contributions will no longer be required to work the required 40 hours in a period of 30 consecutive days in the financial year in which they wish to contribute. The opportunity is clearly significant.

This change extends an exemption granted just a few years ago, under which those aged over 65 could make super contributions in the financial year after they retired as long as their balance was below $300,000; the “work test exemption” as it was called.

  • This work test exemption will also extend to the ability for retirees to make bring-forward contributions until attaining 75 years of age, and in some cases beyond this. That is, subject to normal contribution limits, being $110,000 per person, per year, a member is able to bring-forward up to three years of contributions into a single year during this period for a total of $330,000.

    As is currently the case, this is limited to $110,000 or one year of bring forward for those with a total super balance between $1.59 and $1.7 million, $220,000 for those between $1.48 and $1.59 million, and the full $330,000 for those with balances below $1.48 million. There is also a small loophole which will allow a member slightly over 75 to make a contribution without having to satisfy the work test, as long as the contribution is made within 28 days of the end of the month that they attained 75 years of age.

    The other most relevant change is the reduction in the “Down Sizer” contribution criteria, which allows a one-off $300,000 contribution, outside of the normal caps, from the sale of one’s principal residence. The age limit will fall from 65 to 60, in an effort to get the property market moving once again.




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