The rules around contributing to superannuation are constantly changing and evolving. With the new financial year behind us, now is the best time to ensure you understand the work test changes, contribution caps and the changes to contribution rules to ensure you can make the most of them.
Work Test Changes
Meeting the work test (i.e. working 40 hours over a 30-day consecutive period) was previously a requirement for those over the age of 67 looking to make superannuation contributions, regardless of whether the contributions were concessional or non-concessional.
From 1 July 2022, the work test is only required if you are over 67 years and intend to claim a tax deduction on your personal contributions.
This means that those aged over 67 can now continue to make non-concessional contributions - provided their total superannuation balance allows - up to the age of 75.
Downsizer Changes
As at 1 July 2022, the age requirement for access to the Downsizer contributions has been lowered from 65 to 60. The downsizer scheme allows eligible homeowners to make a one-off super contribution of $300,000 outside of other contribution rules.
Some of the eligibility criteria you must satisfy before making downsizer contributions are:
- The home must be in Australia, have been owned by you or your spouse for at least ten years, and the disposal must be exempt or partially exempt from capital gains tax (CGT)
- You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home
- Prior to (or at the same time as) making your contribution, you must provide your fund with the 'Downsizer contributions into super form'.
- STOP PRESS: Anyone over 55 may soon be able to make downsizer super contributions if tax amendments recently introduced to Parliament are passed. The reduction in the age qualification to 55 years, could apply as soon as 1 October. Keep an eye out for updates in our upcoming Super News editions.
Superannuation Contribution Caps
When making superannuation contributions, it is important to ensure your annual contribution caps are not exceeded to avoid paying additional tax.
The general contribution caps for the year ending 30 June 2023 are as follows. However, it may differ as a result of your individual circumstances and your total superannuation balance:
Type of Contribution |
Annual Cap |
|
Concessional (pre-tax) |
$27,500 |
|
Non-Concessional (after-tax) |
$110,000 |
Concessional Contributions
Concessional contributions are amounts paid into superannuation, where the contributor is eligible to claim a tax deduction. These are included in a fund’s assessable income and include:
- Employer Contributions
- Salary Sacrificed Contributions; and
- Personal contributions for which the member is entitled to claim a tax deduction.
Carry-Forward Concessional Contributions
Introduced in 2019, the carry forward concessional contribution rules allow individuals to utilise any unused portions of their concessional contribution caps from the last five years to maximise their concessional contributions.
Access to the carry-forward concessional contributions is limited to those with a total superannuation balance below $500,000 at 30 June of the previous year, and is only available if you are eligible to claim the relevant deduction in your tax return without being put in a tax loss position.
Example: Unused Carry-Forward Cap |
|||||
|
|
2018/19 |
2019/20 |
2020/21 |
2021/22 |
2022/23 |
|
Concessional Contribution Made |
$5,000 |
$5,000 |
$10,000 |
$NIL |
$NIL |
|
Concessional Cap |
$25,000 |
$25,000 |
$25,000 |
$27,500 |
$27,500 |
|
Carry-Forward Available |
- |
$20,000 |
$40,000 |
$55,000 |
$82,500 |
Non-Concessional Contributions
Non-Concessional contributions are voluntary contributions made into the fund tax-free with after-tax money, and can include:
- Personal contributions where no tax deduction is claimed
- Non-Assessable amounts transferred from a foreign super fund
- Contributions made in excess of the concessional contributions cap, which is left in the fund.
The following are also considered tax-free contributions, but do not count towards the non-concessional contribution limits:
- Contributions made under a CGT Retirement Exemption Election
- Contributions made under a Downsizer arrangement
- Government contributions (including Low Income Super Contributions & Co-Contributions).
Bring Forward Non-Concessional Contributions
The bring forward non-concessional contribution rules allow a member to ‘bring forward’ two years’ worth of non-concessional contributions, dependent on your total superannuation balance at 30 June of the preceding year. As your total superannuation balance is directly linked to your allowable bring forward amount, it is recommended to check in with your local adviser to ensure the contributions you intend to make are within limits to avoid paying excess contributions tax.
Total Super Balance at 30 June (TSB) |
Annual NCC Limit |
Allowable Bring Forward Amount |
|
Less than $1.48m |
$110,000 |
$330,000 |
|
$1.48m – less than $1.59m |
$110,000 |
$220,000 |
|
$1.59m – less than $1.7m |
$110,000 |
NIL |
How we can help
The contribution caps available to you will differ based on your individual circumstances and total superannuation balance. We recommend reaching out to your local BDO adviser before making contributions to ensure all the relevant caps and requirements are met.