Superannuation 2022

With the end of another financial year approaching fast it is important to ensure that you have met your superannuation obligations for the year and look ahead at changes that apply for the new financial year. The latest changes all appear to be positive ones and increase the opportunities to make contributions into your superannuation fund.

As always, we are here to help so don’t hesitate to contact us if you need any advice or have any queries. Regards…Vic, Andrew & John.

SMSF YEAR-END REVIEW

Maximise Concessional (Tax Deductible) Contributions

The limit for concessional contributions for 2021-22 is $27,500 which includes employer contributions, salary sacrifice, and personal contributions claimed as a tax deduction. These need to be received & cleared by your superannuation fund prior to 30 June so allow plenty of time for this.

If your total super balance was less than $500,000 at the start of the financial year and you did not use up the whole of your allowable limit in previous years (2019, 2020 and 2021), you are able the make “catch-up” contributions of the unused portion as well as your current years limit.

Consider Non-Concessional (After tax) Contributions

You can boost your super balance with additional after-tax contributions with the annual limit for this type of contribution currently being $110,000 depending on your total super balance. For 2021-22 those over age 67 will also need to meet the work test.

If you were under age 67 during the 2021-22 year and meet all eligibility requirements, you may be able to “bring forward” limits of the next 2 years and contribute up to $330,000 in the one year.

Check Minimum Pension Payment requirements have been met

If you are in pension phase you must ensure that the minimum amount has been paid to you in cash before 30 June to receive concessional tax treatment. The 50% reduction in the normal pension amount has been extended to 30 June 2023.

Review Values of your SMSF Assets

All assets are required to be recorded at market value at the end of each financial year. Listed securities and cash are easily measured but extra effort may be required for unlisted investments, property, or collectibles. Property valuation requirements have become more stringent, and trustees must consider whether the most recent valuation is reasonable and provide evidence to support it.

Review your Investment Strategy

Your investment strategy is your plan for making, holding and realising assets consistent with your investment objectives and retirement goals. It should set out why and how you’ve chosen to invest your retirement benefits to meet these goals.

The superannuation laws require that you must prepare and implement an investment strategy for your self-managed super fund (SMSF) which you must then give effect to and review regularly.

Do you have a valid BDBN

With most SMSF deeds the payment of a death benefit is at the discretion of the trustees unless there is some form of binding direction such as a binding death benefit nomination (BDBN) or an auto reversionary pension. A BDBN is particularly important if a member would like certainty as to who gets their super proceeds on their death.

KEY CHANGES APPLYING FROM 1 JULY 2022

Increase in Superannuation Guarantee

From 1 July 2022 the Superannuation Guarantee contribution that employers are required by law to pay into an employees’ superannuation fund will be 10.5% of their ordinary time earnings, up from the current 10%. The rate is legislated to rise by 0.5% each year until it reaches 12% in 2025.

Super Guarantee $450 monthly earning threshold scrapped

All workers will be paid superannuation on ordinary time earnings from July after the minimum salary threshold of $450 a month for receiving it was abolished. Low-income earners will be the main beneficiaries but employees under 18 will need to work more than 30 hours per week to qualify for super guarantee payments.

Removal of the work test for some retirees

People aged between 67 and 74 years will no longer need to meet the work test for salary sacrifice or personal after-tax (non-concessional) contributions. This will be very helpful for those who have savings or inheritance that they wish to contribute to super subject to the contribution limits. The work test will still need to be met to claim a tax deduction for personal superannuation contributions for those over age 66.

Reduced age threshold for the downsizer contribution

Eligible people can use the proceeds from the sale of the family home in Australia to boost their super and from 1 July 2022, the eligibility age reduces from 65 to 60. Up to $300,000 per person can be contributed if all conditions are met including:

• you or your spouse owned the home for at least 10 years prior to the sale
• the property being sold must be in Australia and cannot be a mobile home
• you make the contribution within 90 days of receiving the money from the sale

There are many factors to consider with your SMSF each year.  We are here to take your calls and emails all year round should you need help with anything superannuation related.

DISCLAIMER: This information on this website is not advice. Clients should not act solely based on the material contained in this newsletter. Items listed are general comments only and do not constitute or convey advice.  Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.