Login

Superannuation budget measures pass Parliament

Feb 11, 2022, 15:25 PM

By Anthony Cullen
Senior SMSF Technical Specialist

Anthony-Cullen_90x90mm

Late last year, I reported on the superannuation budget measures that had been introduced and then stalled in the House of Representatives at the close of the summer sitting session.  These measures have now passed both houses of Parliament on Thursday, 10 February 2022.

A summary of the superannuation measures that have passed are:

• Removal of the $450 threshold,
• Increase in First Home Super Saver Scheme,
• Reduction in the eligibility age for downsizer contributions,
• Work test reform (increase in work test age),
• Choice in applying segregation of current pension assets for exempt current pension income purposes.

You can read greater details on the measures in my previous article here.

The final reading of the bill was not available at the time of writing. We do know that the Greens opposed three of the measures in the Senate, being:

• Increase in First Home Super Saver Scheme,
• Reduction in the eligibility age for downsizer contributions,
• Work test reform (increase in work test age).

However, the bill did not return to the House of Representatives as there was enough support for the bill to pass without amendments. We expect the final drafting will mirror the bill, as introduced.

It is also important to note that the bill has not received royal assent at the time of writing. It would be expected that this is a mere formality, though. This should not impact the application date of the measures.

Except for the current pension asset segregation choice, all measures are slated to have an application date from 1 July 2022 onwards. The choices related to asset segregation should apply for the 2021-22 financial year.

Although these measures won’t start until the next financial year, they should be considered when undertaking any planning strategies over the remainder of this year, particularly the changes to the work test rules.  Members will need to continue to comply with the current work test laws this financial year.  Despite that, given the upcoming changes to increase the work test age and availability to potentially access the bring-forward rule from 67 to 75, this may impact decisions and plans and allow for greater options to be explored.   

We also need to appreciate that the changes to the work test requirements will amend the Income Tax Assessment Act (ITAA) and shift the implications of not meeting the work test (where required) onto the individual contributor.  Currently, the responsibility lies with the trustees of a fund, under the acceptance rules within the Superannuation Industry (Supervision) Regulations (SIS).   

A legislation instrument will be needed to remove the acceptance rules from the SIS regulations for the amendment to the ITAA to be functional as intended.  With limited sitting days left before an expected election, it remains to be seen when this may occur.