The Government has committed to deliver on their proposal to increase flexibility for those in their mid-60s to make contributions as well as other superannuation measures.Join our newsletter
As we wrote in March, last year the Government’s Federal Budget and Election campaign included a measure to allow, from 1 July 2020:
- 65 and 66-year olds to make or receive super contributions without meeting the 40 hours in a 30 day period work test, and
- those turning 66 and 67 to trigger the non-concessional contribution “bring forward” arrangements, and
- those age 70 to 74 to receive spouse
We have been awaiting the passage of this highly anticipated legislation, as it opens up some excellent planning opportunities for those in their mid-60s.
Unfortunately, in the meantime, the COVID-19 situation arose
which effectively threw the Parliamentary sitting timetable into disarray. So
where are we now?
The good news is that Regulations are now in force so that:
- from July 1 2020 people aged 65 and 66 can make voluntary concessional and non-concessional contributions without meeting the work test, and
- people up to age 75 can receive spouse contributions (if they are age 67 or over they will need to meet the work test).
Unfortunately, we are still waiting on the legislation to provide the ability for those turning 66 and 67 to trigger the non-concessional bring forward arrangements. The bring forward rules are embedded in the Income Tax Assessment Act 1997, and as such can only be amended by Acts of Parliament.
The Bill to make this happen (the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 is currently before the Parliament. We had hoped it would pass prior to 30 June to allow for certainty in planning, however in these exceptional circumstances it wasn’t meant to be.
The next sitting of Parliament is in August and we are hopeful that this will see the passage of the Bill through both Houses. The Morrison Government yesterday confirmed its commitment to deliver on the promise, and we are not aware of any opposition to the measure. We assume that once law it will be effective from 1 July 2020 as announced.
- Those currently age 65 and 66 (but not yet turned 67) can make and receive personal, employer and spouse contributions (and Downsizer) without any regard to their work status.
- Anyone who was 65 or 66 on 1 July 2020 CANNOT trigger a bring forward of non-concessional contributions YET. However, watch this space.
The Morrison Government has also announced revised start dates on other technical superannuation and taxation measures as a result of the “reprioritisation of Government resources and the shortened parliamentary sitting period in 2020 due to the COVID-19 crisis.”
- The Government remains committed to increasing the maximum number of members in SMSFs and small APRA funds from four to six . Whilst a specific start date has not been announced, they plan to progress this change for delivery as soon as possible.
- The proposed changes to the methods available to calculate exempt current pension income announced in the last Federal Budget have been moved from 1 July 2020 to 1 July 2021 (ie the 2021/22 year).
- There was no mention of the planned three yearly audit concept – it appears to have quietly been shelved.
It’s been a crazy year!