1 July 2022 saw a relaxation of the contribution rules to allow anyone up to the age of 75 to make voluntary contributions to super. These changes created opportunities for all SMSF members, to boost their retirement savings, particularly for retired individuals over the age of 67 who were previously unable to contribute.
The following changes apply for 2022/23:
- Individuals up to the age of 75, no longer have to meet a work test to make voluntary, nondeductible, contributions.
- Individuals up to the age of 75, have the opportunity to make large NCCs (up to three years worth) in a single year.
- The minimum age to make downsizer contributions was reduced to 55 on 1 January 2023, allowing more individuals to use the proceeds from the sale of their home, to fund their retirement.
- The Superannuation Guarantee (SG) rate increased to 10.5% p.a. and the $450 minimum monthly income threshold to be entitled to receive SG contributions no longer applies.
- Under the First Home Super Saver Scheme (FHSSS) eligible individuals have access to an extra $20,000 of voluntary contributions to fund a home deposit.
Combined, the above-mentioned changes present opportunities for individuals in the age group of 55 to 75, to boost their retirement savings, including moving capital from outside of super into super.
With the relaxation of the contribution rules from 1 July 2022 the risk of excess contributions increases. The only time a trustee cannot accept a personal contribution is if a member does not meet the relevant age requirement or has not provided their TFN to the trustee.
Note: It is important to understand that the above changes may still be limited by the relevant contribution cap limits and a member’s TSB.
Some additional matters to note before considering whether you can make any contributions in 2022/23 include:
- Where contribution cap limits apply, they apply in the year that a contribution is allocated to a member.
- With the exception of downsizer and mandated employer contributions, all contributions must be received by a super fund no later than 28 days after the end of the month in which the member turns 75.
- High income earners making/receiving concessional contributions may also be subject to an additional 15% Division 293 tax.
Although the contribution rules were simplified from 1 July 2022, it is still important to consider all past contributions when planning for future contributions.
Do not leave contributions for 2022/23 until the last minute.
The 30th of June 2023 falls on a Friday this year, so any contributions made directly to an SMSF via electronic funds transfer should allow sufficient time to ensure the contributions are cleared into the SMSF bank account prior to 30 June 2023.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.