What are the new changes to super?
The latest changes to super in Australia cover five key areas:
- Super Guarantee increase
- Removal of the $450 threshold for super contributions
- Expansion of the First Home Super Saver Scheme
- Abolishing the work test for retirees
- Expansion of the Downsizer Scheme
Increase to the Super Guarantee
The Federal Budget in May 2023 maintained the Super Guarantee's legislated increase to 12%. From 1 July 2023 the Super Guarantee increased to 11%. It will continue to increase by 0.5% on 1 July each year until it reaches 12% in 2025.
Removing the $450 threshold for super contributions
The $450 monthly earnings threshold for superannuation contributions was removed on 1 July 2022. Under the change, employers are required to pay the Superannuation Guarantee on the wages of employees’ earning less than $450 per month. If you are under the age of 18, unless you are covered by a workplace agreement that states otherwise, you need to work more than 30 hours in a week. See here for further details.
Expansion of the First Home Super Saver Scheme
The maximum withdrawal from the First Home Super Saver Scheme increased from $30,000 to $50,000 from 1 July 2022.
Abolishing the work test for older Australians
If you are under 75 years of age during the financial year you can make non-concessional or salary sacrifice contributions provided your super balance is less than $1.9 million in July of that year. The work test continues to apply if you wish to claim personal super contribution deductions.
Expanding the Downsizer Scheme
The eligibility age for the Downsizer Scheme was lowered from 60 to 55 years on 1 January 2023. The Downsizer Scheme allows eligible people who sell their home to make a one-off, $300,000 contribution to their super, outside the concessional and other rules. Couples can contribute $300,000 each.
The changes to superannuation rules above are all in effect today, however a number of other proposed changes may be in the pipeline. The latest changes to pensions may also affect your retirement planning or income.