Government registers regulations for work test repeal

The bill contained changes to the work test and the work test exemption for people ages 67 to 75 for them claiming a tax deduction for their personal contribution, amended the downsizer eligibility rules, removed the $450 per month SG threshold and made changes to the First Home Super Saver Scheme to increase the total amount of contributions that can be accessed to purchase a first home. 

The bill moved the work test out of the SIS regulations and into the Tax Act to require people between ages 67 and 75 to satisfy a work test or the work test exemption to claim a tax deduction.

However, in order to implement the measure it announced in the 2021 budget to repeal the work test for superannuation contributions, the government needed to table a legislative instrument.

The government has now registered Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022. 

Colonial First State head of technical services Craig Day explained that the new regulations confirm that trustees can accept all member contributions, including salary sacrificed contributions up to age 75, plus 28 days at the end of the month in which the member turns 75.

“That means that from 1 July 2022, members between 67 and 75, can make personal contributions including non-concessional contributions, personal injury contributions and contributions under the lifetime CGT cap without needing to satisfy the work test or the work test exemption first,” Mr Day told SMSF Adviser.

However, he noted that if a member wants to claim a tax deduction for the contribution, they will still need to satisfy the work test or the work test exemption at the point of claiming the deduction.

Mr Day said the regulations also confirm that downsizer contributions can be made from age 60.

“What that bill did is change the downsizer eligibility rules in the Tax Act, but they also needed to modify or amend the SIS Act to allow downsizer contributions from age 60 and that’s what this regulation does,” he explained.

These regulations, he said, will remove all the different work tests for member contributions that used to apply for people between ages 67 and 75.

“This is great news as it will allow those personal injury contributions and contributions under the lifetime CGT cap, which just gives people more time to get those types of contributions in and not having to worry about satisfying the work test before doing so,” he explained.

Mr Day noted that because the regulations are registered, that means they are now law; however, there is a chance that a motion of disallowance could be moved within 15 sitting days.

“Considering that the bill that implemented the other aspects of these changes was supported by both Labor and the government, it would be highly unlikely for that to occur,” he said.