The main piece of superannuation news revealed on Budget day was actually announced by the Treasurer before the Budget speech. It included three measures to help older Australian contribute more to their super – relaxing the contribution work test, increasing the age limit for spouse contributions and extending eligibility for bring-forward arrangements.
Treasurer Josh Frydenberg said yesterday that from 1 July next year, Australians aged 65 and 66 will be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the work test.
Currently, people in this group can only make voluntary contributions if they work a minimum of 40 hours over a 30-day period.
The rule change will align the work test with the eligibility age for the Age Pension, which is scheduled to reach 67 from 1 July 2023.
The Government estimates that there are around 55,000 people aged 65 and 66 who will benefit from the change.
This change comes on top of changes announced in December, when the Government announced that from July this year Australians aged 65 to 74 with a total superannuation balance below $300,000 will be able to make voluntary contributions for 12 months from the end of the financial year in which they last met the work test.
In other changes announced yesterday, Frydenberg said the age limit for spouse contributions would go up from 69 to 74. Currently those aged 70 and over cannot receive contributions made by another person on their behalf.
And the Government will extend access to the bring-forward arrangements, which currently allow those aged under 65 to make three years’ worth of non-concessional contributions to super in a single year.
Under the new rule, this will be extended to those aged 65 and 66.
There were a number of other changes in the Budget that will affect the super industry:
- The Government will make permanent the current tax relief for merging superannuation funds, which is due to expire next year. The tax relief allows funds to transfer revenue and capital losses to a new merged fund and to defer taxation consequences on gains and losses from revenue and capital assets.
- It will simplify fund administration by allowing super fund trustees with interests in both the accumulation and retirement phases during an income year to choose their preferred methods of calculating exempt current pension income.
- The ATO will receive additional funding to increase activities to recover unpaid superannuation liabilities. These activities will focus on businesses and high wealth individuals.
- SuperStream will be expanded to allow the ATO to send electronic requests to super funds for the release of money.
- The Government will fund a process to identify options to support the establishment of a Superannuation Consumer Advocate. The advocate would provide input on behalf of consumers in policy discussions and provide information to educate and assist consumers navigate the superannuation system.