Happily, this year’s Federal Budget has some welcome changes for SMSFs!
All changes expected to commence from 1 July 2022, once they have received Royal Assent. Until this occurs they still may be subject to changes and amendments.
No more work test!
Arguably the biggest and best change! Now anyone aged 67 to 74 (inclusive) will be able to make non-concessional (including under the bring-forward rule) or salary sacrifice contributions regardless of their working status! The usual contribution limits and thresholds still apply.
Reducing the eligibility age for downsizer contributions
The age to qualify to make downsizer contributions into superannuation will be reduced from 65 to 60. No other changes have been made to the eligibility criteria. Downsizer contributions allow members to make a one-off contribution to their superannuation of up to $300,000 each from the proceeds of selling their home. Downsizer contributions do not count to contribution caps so can be a great way to top up retirement savings.
Relaxing residency requirements for SMSFs
SMSFs will have residency requirements for the central management and control test increased from two to five years. The active member test will also be abolished meaning any member who is temporarily overseas may still contribute to their SMSF.
Removing the $450 per month threshold for superannuation guarantee eligibility
While this is not an SMSF specific change, removing the current $450 per month minimum income threshold before employees are paid the superannuation guarantee by their employer means that many part-time and casual employees will start to see an increase in their superannuation contributions.
Legacy retirement product conversions
Members will be able to commute some legacy retirement products – such as market linked or life expectancy pensions.
How can we help?
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2021-22 Federal Budget, please feel free to contact us to arrange a time to meet so that we can discuss your particular requirements in more detail.