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Canberra Today 8°/9° | Monday, July 4, 2022 | Digital Edition | Crossword & Sudoku

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What do you know about super changes?

Accountant GAIL FREEMAN explains changes to superannuation for employers and employees after July 1. 

PERHAPS the most important thing for employers and employees to know is that from July 1 compulsory super increases to 10.5 per cent and from July 1 next year it increases to 11 per cent.

If you are either a part-time worker or casual worker and you earn less than $450 a month, you will get additional superannuation as there will be no minimum threshold in the future.

Have you thought about making additional personal contributions to maximise your superannuation cap?

Gail Freeman.

You have a concessional cap (tax deductible) of $27,500. That does not mean that you can contribute $27,500, it means that the total contributions for which a tax deduction is available are a maximum of $27,500.

Firstly, you need to check how much your employer has paid on your behalf then you need to add any salary sacrifice contributions and subtract that total from $27,500.

This is the maximum you can contribute to your fund and receive a tax deduction. Your fund will probably have a cut-off date for receiving these contributions so you will need to do it now for a deduction this year.

You will need advice if your only fund is CSS or PSS, but not PSSap. You make the contribution to the fund, complete a form on your fund’s website called “notice of intent to claim or vary a deduction for personal super contributions” and make sure that the fund acknowledges receipt. Give a copy of the acknowledgement to your accountant or your tax return preparer for your claim. This will provide you with a benefit if you earn more than $45,000 as your tax saving will be at the rate of 34.5 per cent while the contributions tax will only be 15 per cent, a 19.5 per cent tax saving.

If you haven’t paid the maximum to super this year and your balance is less than $500,000 at the previous June 30, you may be able to make catch-up, concessional contributions. This has been possible since July 1, 2019 and applies for any five-year period starting after 2019.

Have you thought about making a non-tax deductible contribution of up to $330,000?

This is known as a non-concessional contribution. The rules for this are a little complex so you should get advice from your financial adviser as to the amount you can contribute in any year.

The good news is that from July 1 you don’t need to meet any work test provided your total super balance is below $1.7 million. This contrasts with concessional contributions where you still need to meet the work test between 67 and 75.

For another year it is possible to reduce the minimum amount you’re required to draw down from your super by half. You may find that your fund automatically reduces your payment, so watch for this if you don’t want this reduction to apply to you in 2022-23.

There are other changes which you might need to know about. The age at which you can make downsizer contributions has been reduced from 65 to 60. If you are saving for your first home, the maximum amount of contributions that can be released from your fund has been increased from $30,000 to $50,000.

There are still opportunities for you to obtain super benefits. If you want more information contact the friendly team at Gail Freeman & Co Pty Ltd on 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser.
Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.

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