FY 22/23 changes to super that could benefit you
The 2022/23 financial year is underway, and changes to some super rules have come along with it.
In this article you'll find:
- The superannuation guarantee (SG) has increased
- The $450 per month minimum income threshold has been removed
- The threshold for the First Home Super Save (FHSS) scheme has increased
- The work test has been abolished for those aged 67 to 74
- The carry forward age has risen from 67 to 75
- There’s a new eligibility age threshold for downsizer contributions
The superannuation guarantee (SG) has increased
When you check your next payslip, compare it against one from before 1 July and make note of your employer contributions in each. You’ll notice an increase to your employer contribution on your post-1 July payslip—this is because the SG has risen from 10% to 10.5%.
The Federal Government is aiming to progressively raise the SG to 12% by 1 July 2025.
How the SG will increase to 2025
|Financial years||Minimum SC contribution rate (%)|
|1 July 2021 to 30 June 2022||10|
|1 July 2022 to 30 June 2023||10.5|
|1 July 2023 to 30 June 2024||11|
|1 July 2024 to 30 June 2025||11.5|
|1 July 2025 onwards||12|
The $450 per month minimum income threshold has been removed
When legislation was formally passed to remove the $450 Monthly Income Threshold from 1 July, it was estimated approximately 300,000 Australians would benefit from the change. The threshold has now been formally removed, and it’s particularly good news for lower-income earners and women—the latter group is said to make up two thirds of the 300,000 number.
Previously, you had to be earning a minimum $450 in pre-tax income from your employer per month to be eligible for the SG, now 10.5%. Since this change became effective on 1 July, employers are required to make 10.5% super contributions to workers earning less than $450 in pre-tax income per month.
The threshold for the First Home Super Save (FHSS) scheme has increased
The government has increased the maximum amount of voluntary contributions aspiring first home buyers can take from the FHSS scheme to $50,000.
If you’re looking to buy your first home, this scheme allows you to make voluntary contributions to super to save—before 1 July, these contributions were capped at $15,000 a year and $30,000 in total. Under the changes, contributions into a super fund will be allowed up to a maximum of $50,000 in total, but still capped at $15,000 a year. If you’re part of a couple, both you and your partner will be able to utilise your caps up to a maximum of $100,000 combined.
It’s important to note that this scheme relates to voluntary contributions only. If you’re a first home buyer, you can’t withdraw any part of your compulsory super savings (contributions made on your behalf by your employer) under the scheme.
The work test has been abolished for those aged 67 to 74
The work test has been abolished for those aged 67 to 74. Before 1 July, the work test required those aged 67 to 74 to be gainfully employed for at least 40 hours (over 30 consecutive days during the financial year) before making before-tax (concessional) or after-tax (non-concessional) contributions.
If you’re in this age bracket, the change allows you to make or receive after-tax contributions (including under the carry forward rule) or salary sacrifice contributions without meeting the work test, subject to existing contributions caps. It’s important to note that, if you’re in this age bracket, you must still meet the work test to make personal contributions which you intend to claim a tax deduction for. The existing $1.7 million total super balance cap will continue to apply to after-tax contributions.
Please note: the $1.7 million total super balance cap is subject to future indexation in increments of $100,000.
The carry forward age has risen from 67 to 75
If you’re aged 75 or below during a financial year, you may now be eligible to start a carry forward arrangement. Prior to 1 July, those aged 67 or over weren’t eligible to utilise these rules. The government allows you to ‘catch up’ on contributions by allowing you to use the unused portions of your before-tax contributions cap in the previous five-year period (starting from FY 19/20).
Visit the ATO website to learn more about the carry forward rules.
There’s a new eligibility age threshold for downsizer contributions
Fancy a sea or tree change? Retirees who downsize their family home can now contribute up to $300,000 to super ($600,000 for couples) from the sale proceeds from age 60, down from age 65. These contributions won’t count towards your after-tax contributions cap or the total super balance cap of $1.7 million.