Superannuation updates: thresholds, contributions, audit
November 8, 2021
There have been several updates to superannuation recently, and it is important to remain informed.
Here are the key changes you should know about:
Key thresholds:
| 2022-23 | 2021-22 | 2020-21 | |
| Concessional contributions (CC) | $ 27,500 | $ 27,500 | $ 25,000 |
| Non-concessional contributions (NCC) | $ 110,000 | $ 110,000 | $ 100,000 |
| NCC bring forward | $ 330,000 | $ 330,000 | $ 300,000 |
| Downsizer contributions | $ 300,000 | $ 300,000 | $ 300,000 |
| Spouse contributions | $ 3,000 | $ 3,000 | $ 3,000 |
| Total super balance (TSB) | $ 1,700,000 | $ 1,700,000 | $ 1,600,000 |
| Transfer balance cap (TBC) | $ 1,700,000 | $ 1,700,000 | $ 1,600,000 |
| Unused CC carry forward (from 01/07/2018) | $ 500,000 | $ 500,000 | $ 500,000 |
Bring forward arrangements (under 65):
| 2022-23 |
2021-22 | 2020-21 | |
| Less than $1,480,000 (3 years) | $ 330,000 | $ 330,000 | |
| $1,480,000 to less than $1,590,000 (2 years) | $ 220,000 | $ 220,000 | |
| $1,590,000 to less than $1,700,000 (1 year) | $ 110,000 | $ 110,000 | |
| Greater than or = to $1,700,000 | $ – | $ – | |
| Less than $1,400,000 (3 years) | $ 300,000 | ||
| $1,400,000 to less than $1,500,000 (2 years) | $ 200,000 | ||
| $1,500,000 to less than $1,600,000 (1 year) | $ 100,000 | ||
| Greater than or = to $1,600,000 | $ – | ||
| Division 293 tax | $ 250,000 | $ 250,000 | $ 250,000 |
| Low-rate cap (lump sum) | $ 230,000 | $ 225,000 | $ 215,000 |
| Super guarantee (SG) | 10.5% | 10% | 9.5% |
Co-contribution:
| 2022-23 |
2021-22 | 2020-21 | |
| Entitlement | $ 500 | $ 500 | $ 500 |
| Lower income threshold | $ 42,016 | $ 41,112 | $ 39,837 |
| Higher income threshold | $ 57,016 | $ 56,112 | $ 54,837 |
| Defined benefit income cap | $ 106,250 | $ 106,250 | $ 100,000 |
| Small business CGT contribution cap | $ 1,650,000 | $ 1,615,000 | $ 1,565,000 |
Contributions update
It is essential that self-managed super fund (SMSF) trustees and members stay on top of the recent changes to the superannuation contribution rules.
Here are the most recent updates:
What taxable contributions can be made for the year ended June 30, 2023?
The concessional contributions (CC) cap is $27,500 per member for the 2022-23 year.
The 2020-21 concessional contributions cap was $25,000, and was $27,500 per member for the 2021-22 year. Any excess over the concessional contributions cap is taxed at the individual’s marginal tax rate.
Concessional contributions are contributions that somebody is claiming a tax deduction for (employer / individual).
Concessional contributions include:
- Superannuation Guarantee (SG) contributions
- Employer voluntary / extra contributions (e.g. salary sacrifice)
- Member taxable contributions (claimed as a deduction in personal ITR).
What tax-free contributions can be made for 2022-23?
Non-concessional contributions (NCC) are contributions that an individual is not claiming a tax deduction for.
The non-concessional contribution cap is $110,000 for the 2022-23 year. The 2020-21 non-concessional contribution cap was $100,000.
For 2022-23 members aged under 75 have an option to contribute up to $330,000 over a three-year period, depending on their total superannuation balance (TSB).
The rule works as follows for 2021-22 onwards (including 2022-23):
| Total super balance | NCC and bring forward $ |
| < $1,480,000 | $330,000 over 3 years |
| > $1,480,000 and < $1,590,000 | $220,000 over 2 years |
| > $1,590,000 < $1,700,000 | $110,000 over 1 year |
| > $1,700,000 | $0 (nil) |
The NCC rules worked as follows for 2020-21 year (and prior years) for members aged under 65 having an option to contribute up to $300,000 over a three-year period, depending on their total superannuation balance (TSB).
| Total super balance | NCC and bring forward $ |
| < $1,400,000 | $300,000 over 3 years |
| > $1,400,000 and < $1,500,000 | $200,000 over 2 years |
| > $1,500,000 and < $1,600,000 | $100,000 over 1 years |
| > $1,600,000 | $0 (nil) |
It is essential that making a NCC is carefully reviewed by Trustees in terms of the cap rules prior to a contribution being made.
What are the aged-based contribution acceptance rules from July 1, 2022?
From July 1, 2022, to receive a contribution there are now only limited circumstances where a member must meet the work test, being:
- If under age 75, there is no work test requirement (and this commenced from July 1, 2022), for anyone making NCCs or salary sacrifice contributions.
- If aged 67 to 74, a member now only needs to meet the work test if they are making personal concessional (deductible) contributions.
- If 75 or older, you can only receive mandated employer contributions (or downsizer contributions).
It is also noted that from July 1, 2019, if a member is not gainfully employed and aged 67 to 74, they are allowed to make employer and member contributions if:
- they were gainfully employed on at least a part-time basis in the previous year, and
- they had a total super balance (TSB) less than $300,000 at end of previous financial year, and
- they did not use the work test exemption in a previous financial year.
What is the work test?
If an individual is currently aged under age 75 there is no work test required to be able to make a contribution. (It was changed from 67 to 75 from July 1, 2022).
The work test is working 40 hours of gainful employment over a 30-day period at least once during the year.
What are the carry-forward provisions?
An individual can carry forward concessional contributions if their total superannuation balance (TSB) is less than $500,000 at the end of the previous year.
The unused contributions can be carried forward for up to 5 years starting from July 1, 2018, and the first year that this provision can be used was in the 2019-20 year (from July 1, 2019).
What are the splitting of contribution rules?
An individual is able to split their concessional contributions (CC) that are made on their behalf to a spouse, subject to meeting the requirements.
The main reasons that an individual would want to split contributions are to:
- Assist with the limit of only being allowed to have $1,700,000 to start an account-based pension with
- Assist with the ability to make non-concessional contributions (NCC) given the cap limit also of $1,700,000
- Assist with the ability to use the carry forward concessional contributions provisions given the member balance cap of $500,000
- Accommodate age differences between spouses and the ability to access benefits at an earlier date
- Allow for Centrelink advantages by minimising a member’s account
- Allow a member to have sufficient superannuation to be able to pay life insurance.
Is there still a spouse rebate for superannuation contributions?
A spouse rebate for superannuation contributions can be claimed up to a maximum of $540, subject to meeting the requirements.
For the year ended June 30, 2023 (and June 30, 2022), if your spouse earns less than $37,000 per year and you contribute $3,000 into superannuation for them you can claim a tax rebate of $540.
What were the changes to superannuation from July 1, 2022?
The May 2021 Budget proposed changes to superannuation are as follows and most have now been passed into law and had a start date of July 1, 2022. This includes:
- Removal of $450 monthly income threshold to receive employer SG contributions
- Removal of work test for those aged 67 – 74, for NCC and salary sacrifice contributions
- Downsizer contributions age eligibility lowered from age 65 to age 60
The only major proposal that has not yet become law is the amnesty for market linked income streams (term allocated pensions) and defined benefit pensions – a proposed two-year period to convert to more flexible options (e.g. account based pensions or conversion to accumulation and the ability to pay out lump sum benefits).
Audit independence
The audit independence changes commence for SMSF auditors from July 1, 2021.
The independence changes primarily mean that from July 1, 2021 an auditor or audit firm normally cannot audit a SMSF if they or their firm prepare the financial statements, or are involved in the management of the fund. This means that LDB Group can no longer audit an SMSF where we prepare the financial statements for a fund.
LDB Group is using a pool of SMSF auditors to assist with SMSF audits. The pool of auditors that LDB uses includes:
- Sharif Eldebs of Assured Super
- Graham McLauchlan of Hamilton Morello.
Speak to the superannuation experts at LDB Group
If you have any questions about how the superannuation contribution or audit rules relate to you, please contact LDB Group’s superannuation specialists by phoning (03) 9875 2900.