The Federal Budget 2021-22: Key super proposals and pandemic initiative extensions

The Federal Budget has proposed several superannuation changes, which, if made law, will come into effect on 1 July 2022. A number of initiatives implemented during the pandemic have also been extended. 

Proposed superannuation amendments 

These proposals include the removal of the $450 monthly income threshold. This abolishment would mean all workers would be entitled to receive employer super payments, regardless of how much they earn.

The maximum withdrawal from the First Home Super Saver Scheme (FHSSS) is set to increase from $30,000 to $50,000. This scheme allows people to make voluntary superannuation contributions to save for their first home - they cannot withdraw from contributions made on their behalf by their employer.

We may see the abolishment of the work test for those aged between 67 and 74 years. Currently, the work test requires a person to be employed for at least 40 hours in a consecutive 30-day period during the financial year before any super contributions (concessional or non-concessional) can be accepted. The proposed changed will see this condition removed (unless an application to make personal deductible contributions is being made). 

It's also proposed that the eligibility for downsizer contributions be lowered from age 65 to 60. This change will allow retirees, following the sale of their home, to contribute up to $300,000 to their super. Note that this amount would be included in the asset test for the Age Pension. 

Extension of pandemic initiatives

In addition to the proposed super changes, the following initiatives are also set to be extended.

• The Low and Middle Income Tax Offset (LMITO) is extended for 2021/22.

• The Instant Asset Write-off for depreciable assets for businesses has been extended for another 12 months until 30 June 2023.

• Loss-carry back provisions will include tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018-19 income year.

Your trusted accountant or financial adviser is well placed to help you to understand how these changes might affect you.

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