Registered on 28 May, the federal government’s Superannuation Legislation Amendment (2020 Measures No. 1) Regulations 2020 alters the SIS Regulations, increasing the age at which the work test starts to apply for voluntary concessional and non-concessional superannuation contributions from 65 to 67.
Further, the amendment increases the age limit for spouse contributions from 69 to 74.
What are the new regulations?
In a blog, Smarter SMSF chief executive Aaron Dunn said that under the amendment, Subregulation 7.04(1) creates a new age category of 65 to under 67 and specifies the types of contributions that can be made by a member in that age category, which include:
- Mandated employer contributions, or
- Employer contributions (except mandated employer contributions), or
- Member contributions, or
- Downsizer contributions.
In addition, Subparagraph (b)(ii) in Subregulation 7.04(1) is amended to enable spouse contributions to be made in respect of a member who is under 75 years of age, while Subparagraph (d)(ii) in Subregulation 7.04(1) is amended to enable spouse contributions in respect of a recently retired member who is eligible for the one-year work test exemption.
“These changes open up a range of opportunities, including what I’m calling the ‘opportunity zone’ between 65 and 67 years of age,” Mr Dunn said.
Further, Mr Dunn said that as part of the changes in increasing the contribution rules to age 67, it is proposed that these measures will also extend to the bring-forward rule, allowing for a person with a total super balance (TSB) at the end of the prior of:
- less than $1,500,000 to apply a two-year bring forward amount ($200,000), or
- less than $1,400,000 to apply a three-year bring forward amount ($300,000).
“It is important to note that any changes to regulations can simply be registered by the federal government. However, changes to the Income Tax Assessment Act (ITAA) 1997 requires these laws to be passed by both houses of parliament and become an act,” Mr Dunn said.
“This measure has been introduced into Parliament through the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 on 13 May 2020. It would appear likely that this bill would be finalised during the June sitting days.”
There’s been no change to downsizers here Kym. Check the regs and you’ll see how WT and SC changes have been drafted. The new age category still contemplates downsizers being made from age 65+
This is a good change except it also applies to downsizer. I hope there are not too many people waiting on settlement funds that were intending to contribute if they are less than 67.