By Darren Withers

With the commencement of the 2022/23 year many investors over the age of 67 will soon be able to have their cake and eat it too.

One of the biggest changes is removing the requirement for those aged 67 to 74 to meet a work test in order to make personal super contributions.

As a result, many retired Australians who thought their days of contributing to super were over, again have the ability to add to their retirement savings.

Essentially anyone under 75 can now make non concessional contributions, subject to the normal contribution caps. Not only can this group continue to contribute, they may also access the 3 year bring forward up until the year in which they turn 75. This means that it may be possible to add up to $330,000 at one time.

These changes may create opportunities in a number of situations, including;

  • Where retirees receive an inheritance, extra money could be invested via super.
  • If a retiree receives more from their super pension than they need, the surplus could be re-contributed back into super.
  • If a home is sold to downsize to a smaller property, extra money can now be put into super, in addition to what is possible via the downsizer contribution rules.
  • Retirees who are concerned about the death benefits tax that could be paid by their estate or their children when they die, can make further use of re-contribution strategies to convert taxable super to tax free. Essentially this involves taking tax free lump sums out of super and then adding them back via non concessional contributions.

It should be noted however that non-concessional contribution limits still remain, i.e. contributions are no longer possible once an individual’s total super balance reaches $1.7m. The bring forward is also restricted once balances reach $1.48m.

Although removed for non-concessional contributions, the work test remains for personal concessional contributions. So if you wish to claim a tax deduction for your concessional contributions after reaching 67, you would have to work at least 40 hours over 30 days in that year.

Other changes to super include lowering the age at which someone may make a home downsizer contribution from 65 to 60.

Constant changes to super can be confusing. In this case the changes are positive and can create opportunities for people for whom the ability to contribute was previously closed off.

To better understand if you can take advantage of these amendments you should speak to your adviser.

If you would like more information please call 1300 ELSTON or contact us.