- Key changes to superannuation proposed in budget
- Reduction in the minimum age for downsizer contributions
- Removing of ‘work test’ requirements for older Australians making voluntary contributions to super
Older Australians exploring ways to top up their superannuation were among the key beneficiaries in the 2021 Federal Budget.
Calling it a budget to “rebuild our economy and secure Australia’s recovery,” Treasurer Josh Frydenberg committed to major spending initiatives and tax cuts for Australian workers.
He also proposed a number of key reforms to superannuation, which included a reduction in the minimum age for downsizer contributions, and removing the work test for older Australians making voluntary contributions to their super.
The Government’s downsizer scheme was introduced in the 2017-18 budget and currently allows people aged 65 or over to make a one-off contribution to their super worth up to $300,000 after selling their home, outside of the normal rules governing the tax treatment of super.
Following Mr Frydenberg’s proposal, from 1 July 2022, people aged 60 or over will be eligible to make downsizer contributions to their super.
This will allow eligible Australians nearing retirement to make a one-off contribution of up to $300,000 per person (or $600,000 per couple) when they sell their family home.
Mr Frydenberg also announced in the budget plans to remove the ‘work test’ for voluntary contributions to superannuation, which is aimed at giving older Australians, including self-funded retirees, greater flexibility to contribute to their superannuation.
From 1 July 2022, people aged 67 to 74 will no longer be required to meet the work test when making or receiving non-concessional (after tax) or salary sacrificed superannuation contributions.
Applicable once a person turns 67 years old until they turn 75, the work test means a person must have worked at least 40 hours within 30 consecutive days in a financial year before their super fund can accept any voluntary contributions from them.
By removing the work test completely for voluntary contributions, under the proposal, it means that from 1 July 2022, if a person is aged 67 to 74, they will no longer be required to meet the work test when making, or receiving, non-concessional superannuation contributions or salary sacrificed contributions.
1. Australian Government, Budget 2021-22, Fact Sheet, Superannuation: More flexibility for older Australians at budget.gov.au
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