Superannuation changes from 1 July 2022 

By Stephen Blackhall, Senior planner at LifeTime Financial Group

On 1 July 2022 the Government made a number of changes to superannuation which now allow many people over 65 to make substantial contributions to superannuation, whether they are working or not.

We wanted to highlight these changes to you, so you were aware of the opportunities that are potentially available to you.

Increasing the age to contribute to superannuation to age 75

Now, if you are over age 67 (previously 65) you can make contributions to superannuation even if you are no longer working.

A couple of years ago the age limit for making contributions was lifted to 67 and now anyone under age 75 can make after-tax (non-concessional) contributions to superannuation, regardless of whether they are working or not. 

You now have to ability to make after-tax contributions to superannuation of $110,000 per year up until age 75, providing your total superannuation is less than $1.7 million; and potentially turn those contributions you have made into tax-free pensions.

For example, if you are age 67 and your superannuation balance is low, you could make the following contributions to your superannuation fund over the next 8 years:

Age	Contribution
67	$110,000
68	$110,000
69	$110,000
70	$110,000
71	$110,000
72	$110,000
73	$110,000
74	$110,000
Total possible contributions	$880,000

 

Increasing the age for the bring-forward rule

In addition to allowing people to make the above contributions to superannuation, the Government has also increased the age when people can utilise the ‘bring-forward’ rule.

What the bring-forward rule allows you to do is pay up to 3 years of contributions (ie. up to $330,000) at once and bring forward future years’ contributions.

If we expand on the example above and bring forward the maximum contributions at age 74¹ then the resulting contributions could look something like this:

Age	Contribution
67	$110,000
68	$110,000
69	$110,000
70	$110,000
71	$110,000
72	$110,000
73	$110,000
74	$330,000
Total possible contributions	$1,100,000

 

As you can see from the above examples, a person who is over age 67 can now increase their superannuation substantially, when previously there was little opportunity to do so later in life.

Note: If you wish to claim a tax deduction on your contributions (usually up to $27,500), and you are over age 67, you still need to be working at least part-time to do so.²

Reducing the age for Downsizer contributions

The last item we want to draw to your attention is the Downsizer contribution.

Now, you can make a Downsizer contribution at any time from age 60 onwards ie. you could be 80 and still make a Downsizer contribution, providing you meet the eligibility criteria, and what’s more, you are not limited by the $1.7 million total superannuation balance cap when making Downsizer contributions.

If you have sold a property that was your principal residence in Australia, and you (or your spouse) have held that property for 10 years or more, then you may qualify to make Downsizer contributions of up to $300,000 each.³

Depending on the total proceeds from the sale of your property, that could mean an additional $600,000 ($300,000 each) going into your retirement savings and potentially into tax-free pensions for your retirement.

Why not take the next step and talk to us about boosting your Super benefits

LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you in planning for your financial future.

If you would like to discuss your current position, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.

LifeTime Financial Group. A leading privately-owned Melbourne-based Financial Planning practice with no ties to any financial institution.

¹You can utilise the bring-forward contributions at any time up to age 75, providing you meet the eligibility criteria.

²Working part-time means working a minimum of 40 hours over 30 consecutive days in the financial year in which you intend the make these contributions, and you must also complete a ‘notice of intent’ to claim your contribution, which is available from the ATO.

³Your property must be a fixed dwelling, and the maximum you can contribute to superannuation is $300,000 per person or the sale proceeds of the property (whichever is the lesser).  Downsizer contributions must be made within 90 days of receiving the proceeds, and you must also complete a Downsizer contribution form (available from the ATO) on or before you make your contribution.

General Advice: This document may contain general advice that does not take into account your individual objectives, financial situation, or needs. You should consult the relevant professional for advice before making any decision on the basis of this information. Whilst every effort has been made to ensure the accuracy of the information, it is not guaranteed. All investments are subject to risk, including loss of income and capital invested. Past performance is no guarantee of future performance.