Are you ready for superannuation changes starting from July 2022?

As a financial adviser helping clients in Sydney, Bowral and the Southern Highlands region, we’ve helped many clients who are already changing their approach to superannuation, due to new legislation that came into effect on 1 July 2022.

Those most immediately to benefit from these changes are those on the cusp of retirement, first home buyers and employees.

Here are the biggest changes:

• Employers need to pay 0.5% more to their employees in super, now 10.5% of earnings. 
• Now everyone, not just those earning more than $450 a month, will get super.
• The age at which home owners are eligible to contribute home sale earnings into super has dropped, from 65 to 60 years of age. 
• The work test for retirees aged 67 to 74 years has been abolished.
• Those aged 67 to 74 can now pay $10,000 extra into their super without any tax consequences.
• The amount of super that first home buyers can access is now $50,000, an increase from $30,000.
  
  

There’s quite a bit of detail to consider, especially for those in the retirement planning stage, or even estate planning. The tax implications have changed and more flexible options to take up part-time work in retirement have been introduced, as have measures to even up member balances between spouses.

Want to know more of what to expect and how the changes to superannuation rules could affect your retirement wealth? Here’s a snapshot of the advice that Poole Advisory is sharing with clients. 

Employers need to pay 0.5% more to employees’ super, now 10.5% of earnings

Employers will have to pay more each year into employee super funds.

From July 1, employees  will receive an extra 0.5% in superannuation contributions. Payments have increased from 10% of earnings to 10.5%. That will steadily increase, reaching 12% by 2025.

However, for government employees with higher superannuation contributions, arrangements aren’t expected to change.

Every part-time employee is now entitled to receive super payments

This is a win for low-income earners and those with numerous part-time jobs. 

Previously, employees earning less than $450 a month from a single employer weren’t entitled to receive super. That’s now been abolished. No matter what you earn as a part-time employee, you are entitled to super contributions from your employer.

Home owners aged 60 can now contribute income from the sale of their home

Your age and your total super balance determine how much you can pay into your super fund each year without having to pay extra tax. 

New changes make it easier for home owners to downsize earlier and still take advantage of tax benefits from contributing to their super using money from the sale of their home.

The eligibility age for making downsizer contributions into super has been lowered from 65 to 60.  A downsizer contribution allows a one-off super contribution of $300,000 per person (or $600,000 per couple) from the sale of their home. 

Sound complicated? Poole Advisory can help, with personalised financial advice.

Book a complimentary Introduction Meeting with Anthony Poole today. 

The work test for retirees aged 67 and 74 years has been abolished

Previously, if you wanted to make voluntary contributions into your super between the ages of  67 and 74, you had to be working at least 40 hours a month.  This is no longer the case.

This is good for estate planning and anyone planning to retire, especially when you’re part of a couple. The change also makes it easier for couples to even up their super balances. Tax strategy has a big role to play here, though. If you’re thinking of taking advantage of the changes, it’s a great time to make a plan with a financial adviser.

People aged 67 to 74 can now pay $10,000 more into super without tax consequences 

Previously, people aged 67 to 74 could pay $100,000 into their super a year, without any implications for the amount of tax they were paying. That threshold has now been increased to $110,000. 

As living expenses continue to rise, it could be useful to revisit your financial planning strategy to ensure a healthy buffer in your superannuation savings.

First home buyers can now draw on $50,000 from their super

The First Home Super Saver Scheme  now offers greater support for first home buyers, who are entitled to withdraw $50,000 from their super to put towards their deposit – up from $30,000. 

However, it’s not quite as easy as it might sound. First home buyers may access only the funds that have been voluntarily contributed into the super fund before 2017. Applicants are allowed to withdraw $15,000 once each financial year, up to the $50,000 in total.  

Ready to take the first step towards a secure financial future for you and your family? We’d love to help.

Poole Advisory is a boutique financial advisory firm in Sydney and Bowral offering a collaborative approach and tailored financial services to allow you to live a life of prosperity.

Book a complimentary Introduction Meeting with Anthony Poole today.

We look forward to working with you to create your dream future!

Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

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