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Changes to Superannuation in 2022

By Ershad Ullah March 3, 2022 | Tags:

There are a lot of changes proposed for Superannuation in 2022. Thanks to constant changes in super rules, it’s all too easy to miss out on an opportunity you didn’t know existed, or to be unaware of an upcoming change. Super provides the opportunity to grow your retirement savings while reaping tax benefits along the way

What we know as at February 2022. – Great news for retirees

The key superannuation changes that were proposed in the 2021 Federal Budget have now been passed into law. These changes will impact retirees as well as many people who are approaching retirement.

These changes include:

  • the removal of the work test requirement for non-concessional super contributions for people aged between 67 and 75
  • the extension of eligibility for individuals under 75 to make non-concessional contributions using the “bring-forward” rules.
  • Eligibility to make downsizer super contributions has also been extended to those aged 60 or more (previously age 65).

1. Work Test Rules

The work test no longer needs to be met by individuals aged 67-75 when making salary sacrifice contributions and personal non-concessional contributions to super. However, the test still needs to be met to claim a tax deduction for personal concessional contributions. Apart from the downsizing contribution, no non-concessional contributions can be made once a Total Superannuation Balance (TSB) reaches $1.7 million.

2. Concessional Contributions

Concessional contributions can be made irrespective of the TSB. The current contribution cap is $27,500 a year. This includes super from all sources, including the compulsory employer contributions. If you didn’t use the full $25,000 concessional contributions cap during 2018-19, 2019-20 or 2020-21, any unused cap amounts can be contributed this financial year, potentially providing  you with a larger deduction and tax saving.

For instance, if your concessional contributions were $18,000, $20,000 and $22,000 in each of the last three financial years, then you’ve got an additional $15,000 ($7000 + $5000 + $3000) to play with this financial year and you (or your employer) can contribute up to $42,500 provided your TSB at June 30, 2021 was less than $500,000.

If you don’t use the unused cap amounts before June 30, 2022, all is not lost as you can carry them forward on a rolling five-year basis. In the above example, $7000 can be carried forward until 2023-24, $5000 until 2024-25 and $3000 until 2025-26, provided that in the year you wish to apply them your TSB at the previous 30 June is less than $500,000 – and, of course, you’re eligible to contribute.

3. Changes to Bring Forward Rules

There is no tapering of the bring-forward rule for those approaching age 75. This means that if a person’s age is less than 75 before July 1 – and they meet the eligibility criteria, including that which relates to the TSB – then the bring-forward rule may be triggered. It could enable a person to put up to $330,000 into their super, provided the bring-forward rule has not been used in the previous three years. Contributions would need to be received no later than 28 days after the month the person turns 75.

4. Downsizing Super Contributions

Currently, to make a downsizer contribution after the disposal of a property that was your home (which you or your spouse owned for at least 10 years) you must be aged 65 or more at the time of the contribution. The strategy allows you to boost your super by up to $300,000 even if you’re otherwise ineligible to contribute due to age, work status or TSB. From July 1, the minimum age is to be reduced to 60.

The ability to make a downsizer contribution at age 60 has significant benefits: It could enable people with high super balances to put another $300,000 each into super because the $1.7 million limit on non-concessional contributions does not apply to downsizer contributions. It would also assist people to maximise the amount they can have in super from the sale of their home.


The ability to withdraw money from super and then re-contribute it as a non-concessional contribution can be a useful tool in reducing the death tax – paid on any death benefit lump sums received by non-dependent adult children – as it could convert a portion of the taxable component of a super fund to the tax-free component. If there is a substantial imbalance in the super accounts of a couple, one partner could also withdraw, say, $330,000 and contribute it to their partner’s super, as long as the partner’s super does not exceed $1.7 million

Example: A couple could make total contributions of $630,000 each from the proceeds of the sale of a property. The first contribution would be $330,000, using the bring-forward rule, and the second the downsizer contribution of $300,000. This is where the importance of seeking professional financial advice is crucial because the terms of a property’s sale may have to be tailored to maximise super contributions.

5. Impacts on Capital Gains Tax

In some cases, Tax-deductible concessional super contributions can be used to reduce Capital Gains Tax (CGT). This is relevant if a person has less than $500,000 in super at the end of the previous financial year and either had not been maximising their concessional contributions or because they had been out of the workforce for several years. It is possible that as much as $100,000 could be contributed to super using the catch-up concessional contribution strategy. This could significantly reduce CGT on the sale of an asset.

Given that money in super is not assessed by Centrelink until the holder reaches pensionable age – or starts an income stream from their super fund – the ability to contribute large chunks of money to super can be highly effective, especially if there is an age difference between the members of a couple. By holding the super in the younger person’s name, the senior partner may qualify for a part-age pension.

Spouse contributions

The age limit for spouse contributions is now 74, but the receiving spouse must meet the work test or work test exemption from age 67. A spouse contribution may give you the ability to claim a 18% tax offset of up to $540 by a contribution of $3,000 provided your spouse’s income and super contributions are less than $37,000. Boosting your spouse’s super while obtaining a tax benefit in the process is a win-win situation.

7. Proposed Changes to Start 1 July 2022

There are also a number of proposed changes that due t start on July 1, 2022. Note that we have summarised them here and will update after the Federal Budget announcement in March 2022.

A. Legacy product conversion of market-linked, life-expectancy and lifetime pension and annuity products

A planned two-year period will be provided for the conversion of market-linked, life-expectancy and lifetime pension and annuity products. Importantly, it will not be compulsory for individuals to take part in.

Retirees with these products who choose to will be able completely exit these products by fully commuting the product and transferring the underlying capital, including any reserves, back into a superannuation fund account in the accumulation phase. From there they can decide to commence a new retirement product, take a lump sum benefit, or retain the funds in that account. Any commuted reserves will not be counted towards an individual’s concessional contribution cap and will not trigger excess contributions. Instead, they will be taxed as an assessable contribution of the fund (with a 15% tax rate), recognising the prior concessional tax treatment received when the reserve was accumulated and held to pay a pension.

Products covered: Market-linked, life-expectancy and lifetime products which were first commenced prior to 20 September 2007 from any provider, including self-managed superannuation funds (SMSFs).

Products not covered: Flexi-pension products offered by any provider, and lifetime products offered by a large APRA-regulated defined benefit scheme or public sector defined benefit scheme, will not be included.

 B. Pension Loan Scheme

The flexibility of the Pension Loans Scheme is being improved by the proposition of the provision of access to advance payments. Participants will be able to access up to 26 fortnights’ worth of top-up payments as a lump sum. This measure will provide immediate access to lump sums of around $12,385 for singles, and $18,670 for couples.

A “No Negative Equity Guarantee” will also be introduced which means borrowers under the Pension Loan Scheme, or their estate, will not owe more than the market value of their property, in the rare circumstances that their accrued Pension Loan Scheme debt exceeds their property value. This brings the Pension Loan Scheme in line with private sector reverse mortgages.

 C. $450 monthly income threshold for mandatory employer contributions removed

The current $450 monthly income threshold prevents an estimated 300,000 low paid workers, 63% of whom are female, from receiving mandatory employer super contributions (superannuation guarantee contributions). The budget measures intend to remove this threshold and will ensure this group of workers are paid super. If you’re still working, even if for limited hours, this could mean more retirement savings.

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