#smsfupdate

🚀 Exciting Superannuation News! 🚀

Great news for those nearing retirement! 🌟 Starting from 1 July 2022, individuals aged between 67 and 74 will no longer need to meet the work test to make non-concessional or salary-sacrificed contributions to their superannuation. This game-changing update, welcomed by SMSF accountants and individuals alike, brings incredible flexibility to retirement planning.

📢 The announcement, made in the Federal Budget on 11 May 2021, eliminates the work test for voluntary contributions, granting older Australians, including self-funded retirees, more freedom in managing their superannuation.

💼 As per the government's superannuation fact sheet, individuals who are currently 70 years old may have worked tirelessly for over two decades before compulsory superannuation was introduced in 1992. This modification in the work test regulations acknowledges the need to empower retirees who didn't benefit from compulsory superannuation during their working years, allowing them to maximize their returns from the superannuation system.

What's the Work Test? The work test in superannuation serves as an eligibility criterion for Australians to make contributions to their superannuation accounts. It typically applies to individuals aged between 67 and 74, requiring them to engage in at least 40 hours of work within a consecutive 30-day period within a financial year before their super fund can accept voluntary contributions on their behalf.

The Impact of Work Test Removal Starting from 1 July 2022, individuals aged between 67 and 74 will no longer be required to meet the work test for non-concessional or salary-sacrificed contributions to superannuation, as the work test for voluntary contributions will be completely abolished. 🙌

✨ Additionally, you'll become eligible for the non-concessional bring-forward arrangement if you meet the relevant criteria. However, the $1.7 million lifetime superannuation contributions cap and the annual concessional and non-concessional caps will continue to apply.

📝 It's essential to note that concessional personal deductible contributions for individuals aged 67 to 74 will still be subject to the work test requirements.

For more information, check out the Australian Tax Office (ATO) page on how the removal of the work test will impact you and your superannuation funds.

Unlocking Freedom in Retirement This significant update in the removal of the work test offers new possibilities for those planning their retirement. 🌅

Qualifying for the Work Test Exemption Criteria A one-year exemption from the work test, introduced in the 2018-19 Federal Budget, allows individuals aged between 67 and 74 with a total superannuation balance below $300,000 to make voluntary contributions for up to 12 months from the conclusion of the financial year in which they last met the work test. Remember, the work test exemption can only be utilised once in a lifetime.

🎓 If you're part of a defined benefit fund, you won't be able to use the work test exemption. However, you can open an accumulation account with another super fund to make voluntary contributions using the work test exemption.

To be eligible for the work test removal, you must meet three conditions:

You satisfied the work test in the financial year before the year in which you made the contribution.

Your total super balance is less than $300,000 at the end of the previous financial year.

You did not use the work test exemption in the previous financial year.

📌 Key Takeaways:

From 1 July 2022, no work test will be required for voluntary super contributions for those aged 67 to 74.

This change provides older Australians with increased flexibility in contributing to their superannuation.

The existing $1.7 million cap on lifetime superannuation contributions remains in effect.

Annual caps for concessions and non-concessions also apply.

Personal concessional contributions for those aged 67 to 74 are still subject to the work test.

The work test exemption allows those aged 67 to 74 with a total super balance below $300,000 to make personal concessional contributions for up to 12 months from the conclusion of the financial year in which they last met the work test.

In Conclusion The removal of the work test for individuals aged 67 to 74 opens up exciting opportunities for retirement planning. 🌟 Take advantage of this change to make the most of your superannuation and enjoy greater flexibility in your financial journey.

SMSF update