Certain changes to non-mandated contributions to super are coming. Now is a good time to review your contribution strategy.
The government will introduce changes to non-mandated contributions for members under 75 and 75 years and over starting July 1 2022.
Contributions in general terms
There are minimum standards for accepting contributions into your self-managed super fund (SMSF), and the trust deed of your fund may have more rules. That said, contributions to a superannuation fund fall under the terms of either ‘mandated’ or ‘non-mandated. Mandated contributions are those made by an employer under law or industrial agreement and include super guarantee contributions (SGC). Non-mandated contributions are made by employers (over and above SGC) and members (or on behalf of members). Member contributions may be:
- Personal contributions
- Downsizer contributions
- Super co-contributions
- Eligible spouse contributions
- By a third party eg an insurer
- A re-contribution of amounts taken as part of COVID-19 early release superannuation program.
Changes for members under 75 years
All types of non-mandated contributions will be accepted for members under 75 years of age from July 1 2022, including downsizer contributions providing the member is 60 or over.
For a member turning 75, contributions must be received no later than 28 days after the end of the month they turn 75.
Changes for members 75 years old or over
Downsizer contributions are accepted. A TFN must be provided. Generally, other non-mandated contributions are not accepted.
Super co-contributions and employer contributions that relate to a valid contribution period for the member can be accepted at any time.
It’s important to understand that a valid contribution period is about the member being gainfully employed for at least 40 hours in a period of 30 consecutive days in each financial year in which the contributions are made. Unpaid work does not meet the definition of ‘gainfully employed’.
Your next steps
This presents excellent opportunities for individual members to maximise contributions before they turn 65.
For example, if an individual member as a total superannuation balance under $1.7m and receives a taxable income from other assets, the member may choose to transfer some of the assets into their super where, moving forward, the income would attract a less than 15% tax rate.
This is subject to certain conditions including transfers that are only cash, an in-specie transfer of listed shares and commercial properties (or part of). Contribution cap rules still apply and bring-forward contribution rules can also be applied.
Of course, these decisions demand careful consideration and our advice is recommended. We’re ready to help. Contact us on +61 3 9820 6400 to discuss the next step to take.
