Australia’s super system always seems to be changing, but this year the changes were limited. This 1 July brings a return to normal for account-based pension withdrawals and previously scheduled increases to the superannuation guarantee rate and Age Pension Age, along with indexation of the transfer balance cap.
Prior years though have brought significant reform, making it difficult to keep track of our complex super system.
If all the recent changes and reforms have left you wondering what it all means for your super and retirement plans, here’s a quick guide to the key legislative changes and when they commenced.
Super rule changes starting 1 July 2023
Increase in Super Guarantee percentage
From 1 July 2023, the percentage rate for the Super Guarantee (SG) increases from 10.5% to 11%. Employers are required to contribute additional money into their employees’ super accounts in line with the higher SG percentage rate.
Under the current schedule of legislated increases, the percentage rate will rise again to 11.5% on 1 July 2024 and again to 12% on 1 July 2025, where the rate will stay until any further changes are legislated.
Return to standard account-based pension minimum drawdowns
The temporary halving of account-based pension minimum drawdown percentages comes to an end on 1 July 2023. The reduction in minimum applied from 1 July 2019 to 30 June 2023.
Many people with an account-based pension will find that their minimum drawdown is significantly higher than prior years thanks to the end of this measure.
Indexation of the transfer balance cap
The transfer balance cap puts a limit on the amount of super that can be transferred into tax-free retirement pensions. On 1 July 2023 the cap increases from $1.7 million to $1.9 million. If you have previously transferred super into the retirement phase, your personal transfer balance cap is different.
Non-concessional contribution cap and bring forward rule
The indexation of the transfer balance cap has flow-on effects for individuals with a high total super balance (TSB).
If your TSB is equal to or higher than the transfer balance cap on 30 June, your non-concessional contribution cap for the following financial year is zero.
Similarly, if your TSB is within two times the non-concessional contribution cap of the transfer balance cap the operation of the bring-forward rule is modified. The bring-forward rule allows you to contribute more than the non-concessional cap in one year by ‘bringing forward’ the cap from future years.
The increase to the transfer balance cap means people who could not make non-concessional contributions in prior years may be able to do so in 2023–24, and access to the bring-forward arrangement may also change.
The table below shows how indexation affects the operation of the bring forward rule for higher balances.
|TSB on 30 June 2022
|TSB on 30 June 2023
|Bring forward available in the following year
|3 years – $330,000
|$1.48 million to <$1.59 million
|$1.68 million to < $1.79 million
|2 years – $220,000
|$1.59 million to <$1.7 million
|$1.79 million to <$1.9 million
|None – standard $110,000 cap
|$1.7 million or more
|$1.9 million or more
|N/A – cap is zero
Increase to Age Pension Age
From 1 July 2023, the Age Pension Age increases to 67 for anyone born on or after 1 January 1957.
If you were born prior to 1 January 1957, you will have already reached your Age Pension Age by 1 July 2023.
Once you reach Age Pension Age, you can receive the entitlement if you meet the Australian residency requirements and have income and assets below the cut-off points.
SMSF reporting from 1 July 2023
SMSF trustees are responsible for reporting all transactions that affect the transfer balance account of the fund members’, including details around the commencement or ceasing of retirement phase income streams, and other relevant events.
Up until 30 June 2023, those relevant events needed to be reported to the ATO either on a quarterly or annual basis, depending on the balance of the members pensions. However from July 2023, ALL SMSFs are required to report ALL relevant events on a quarterly basis.
If you are a trustee of an SMSF that was previously required to report on an annual basis, you will need to make sure that any unreported event that occurs pre-30 September 2023 is reported to the ATO by 28th October 2023.
Click the box headings below to see superannuation rule changes for previous financial years.
Super rule changes starting 1 July 2022
Increase in Super Guarantee percentage
From 1 July 2022, the percentage rate for the Super Guarantee (SG) increases from 10% to 10.5%. Employers are required to contribute additional money into their employees’ super accounts in line with the higher SG percentage rate.
The SG has been 10% since 1 July 2021 and under the current schedule of legislated increases, the percentage rate will rise again to 11% on 1 July 2023. It will continue rising 0.5% each year until it reaches its final rate of 12% on 1 July 2025.
Removal of the $450 monthly SG threshold
A major change commencing 1 July 2022 is the abolition of the $450 monthly minimum wage threshold to qualify for employer Super Guarantee contributions.
This scrapping of the monthly threshold amount means employers are now required to make super contributions for all their employees (including casual and part-time employees) regardless of how much they earn. The only exceptions are employees aged under 18 and working less than 30 hours per week.
Reduction in eligibility age for downsizer contributions
Following passage of the Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022, the eligibility age for making downsizer contributions into super was reduced from 65 years to 60.
From 1 July 2022, more people in their sixties can make contributions (up to $300,000 per person or $600,000 per couple) into their super account using the downsizer measure, provided they meet the eligibility criteria.
Increase in age limit for voluntary super contributions
From 1 July 2022, anyone aged 67 to 74 who wishes to make a non-concessional, voluntary super contribution is no longer required to meet the work test (or work test exemption) to be eligible to make the contribution. The other normal eligibility criteria such as a Total Super Balance (TSB) of less than $1.7 million and sufficient unused annual non-concessional contributions cap still apply.
The only exception is for people wishing to make a personal contribution into their super account and then claiming a tax deduction for the contribution. This type of personal concessional contribution still requires the contributor to meet the work test (or work test exemption).
Spouse contribution age limit increased
In line with the other increases in the contribution age limits, from 1 July 2022 it is possible to make a contribution into your spouse’s super account without you or your spouse needing to meet the requirements of the work test (or work test exemption). The other normal eligibility criteria such as a TSB of less than $1.7 million and sufficient unused annual non-concessional contributions cap still apply.
Increase in age limit for salary-sacrifice contributions
The age limit for making salary-sacrifice contributions into super without needing to meet the work test has also been increased from age 68 to 74. This means from 1 July 2022 eligible salary-sacrifice arrangements into super are available to anyone aged under 75 without the need to meet a work test. The other normal eligibility criteria such as a TSB of less than $1.7 million and sufficient unused annual non-concessional contributions cap still apply.
Increase in age limit for bring-forward rule
Older super fund members who want to make a large non-concessional contribution into their super account can now do so from 1 July 2022, after the Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022 became law. The reform lifts the cut-off age for using the bring-forward rule to under 75 from under 67 previously.
This means people up to age 74 can use up to three years’ worth of their non-concessional (after-tax) contribution caps over a shorter period. Eligibility to use the bring-forward rule will still depend on the contributor’s TSB at 30 June of the previous year and the total of personal contributions over the past two financial years.
Increase in First Home Super Saver Scheme (FHSSS) limit
From 1 July 2022, the maximum amount of eligible contributions that can be released through the First Home Super Scheme (FHSS) increases from $30,000 to $50,000. However, the annual limit for voluntary contributions eligible for the scheme remains at $15,000 per financial year.
Temporary reduction in super pension minimum drawdowns
The government has extended the temporary reduction in the minimum drawdown rates by 50% for account-based pensions and similar products in the 2022–23 income year. The temporary reduction also applied to the 2019–20, 2020–21 and 2021–22 financial years.
Changes to the Home Equity Access Scheme (HEAS)
Following passage of the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Act 2022, older Australians who have applied to use the government’s HEAS can access lump sum advance payments from 1 July 2022. The maximum advance is capped at 50% of the maximum annual rate of their pension (including pension and energy supplements and rent assistance).
The legislation also introduced a no negative equity guarantee for HEAS participants to ensure participants with an outstanding loan balance on or after 1 July 2022 will not have to repay more than the equity they have in the property used to secure their loan.
Super rule changes starting 1 July 2021
Rise in the concessional (before-tax) contribution cap
From 1 July 2021, the annual cap for concessional (before-tax) contributions into your super account will rise to $27,500. Over the period 1 July 2017 to 30 June 2021, the annual concessional contributions cap was set at $25,000.
The higher concessional contribution cap means you can contribute more to your super account on a pre-tax basis. It may also allow you to make bigger concessional contributions in future years if you take advantage of unused concessional cap amounts from previous years to make a carry-forward contribution.
Higher non-concessional (after-tax) contributions cap
The increase in the concessional contributions cap means the general non-concessional contributions cap is also increasing from 1 July 2021 to $110,000 per year. From 1 July 2017 to 30 June 2021, the annual non-concessional contributions cap was set at $100,000.
If you’re eligible, you may be able to start a bring-forward arrangement. This allows you to use up to three years of non-concessional contributions caps in a single financial year (3 years x $110,000 = $330,000).
Increase in Super Guarantee percentage
From 1 July 2021, the percentage rate for the Super Guarantee (SG) will increase from 9.5% to 10.0%. Employers will need to contribute additional money into their employees’ super accounts for the higher SG percentage rate.
The SG has been set at 9.5% since 2014 and under the current schedule of legislated increases will rise again to 10.5% on 1 July 2022.
Increase in the Total Super Balance (TSB) cap
The total limit on the amount you can contribute to super over your lifetime is called the Total Super Balance cap and from 1 July 2021 this amount is increasing to $1.7 million. Once your super balance exceeds the TSB, you are unable to make any more non-concessional contributions into your super account.
Increase in the general Transfer Balance Cap (TBC)
The limit on the amount you can transfer from the accumulation phase to a retirement phase pension is increasing to $1.7 million for anyone starting a new pension on or after 1 July 2021.
From 1 July 2017 to 30 June 2021, the general TBC was set at $1.6 million. If you had a transfer balance account of $1.6 million at any time since 1 July 2017, you are not eligible for the $100,000 increase. Transfer balance accounts below the previous $1.6 million cap receive a portion of the increase.
Temporary reduction in super pension minimum drawdowns
The government again reduced the minimum drawdown rates by 50% for account-based pensions and similar products in the 2021–22 income year. The temporary reduction also applied to the 2019–20 and 2020–21 financial years.
SMSFs must use SuperStream
From 1 October 2021, SMSFs became part of the SuperStream system. This means if members of the SMSF want to rollover super money into the fund or transfer money out, they are required to use SuperStream. Some SMSFs are exempt from the new requirements.
Your Future, Your Super reforms
The controversial Treasury Laws Amendment (Your Future, Your Super) Act received Royal Assent on 22 June 2021 and ushered in a number of significant reforms to the super system.
The changes include a new ATO online YourSuper comparison tool for consumers from 1 July 2021 and ‘stapling’ of fund members to their existing super fund from 1 November 2021.
The legislation also impacts the running of large super funds. From 1 July 2021, APRA will introduce benchmarking tests for the net investment performance of MySuper products. It also strengthens the obligations on super fund trustees to only act in the best financial interests of members and to provide better information on how they manage and spend members’ money.
Maximum number of members in SMSF increases to six
The Senate passed Treasury Laws Amendment (Self Managed Superannuation Funds) Act 2020 on 17 June 2021 without amendment. Among other things, the Act proposes to amend s 17A(1)(a) of the SIS Act to require an SMSF to have fewer than seven members (instead of fewer than five) in order to satisfy the definition of an SMSF.
Besides allowing SMSFs to have up to six members, the main change that will occur relates to the signing of a document which will require at least half of the trustees or directors of the trustee company to sign certain fund and regulatory documents. The Act also standardises the wording used in the SIS legislation so that reference to small funds is consistent.
Bring-forward rule extended to age 65 and 66
Older super fund members keen to make larger non-concessional contributions into their super account finally have their wish with the passage of the Treasury Laws Amendment (More Flexible Superannuation) Act 2021. The legislation now allows eligible people aged 65 and 66 to commence bring-forward arrangements and make up to three years of annual non-concessional contributions caps in a single year. The change was backdated to cover contributions made on or after 1 July 2020.
Excess Concessional Contribution (ECC) Charge removed
From 1 July 2021, people exceeding their annual concessional contribution cap ($27,500 in 2021–22), will no longer be liable to pay the ATO’s Excess Concessional Contributions (ECC) Charge. The Treasury Laws Amendment (More Flexible Superannuation) Act 2021 removed the ECC Charge requirement, although anyone exceeding their annual concessional cap will still be issued with a determination and be taxed at their marginal tax rate (less a 15% tax offset) on the excess amount.
Recontribution of COVID-19 early release amounts
The Treasury Laws Amendment (More Flexible Superannuation) Act 2021 also includes provisions allowing individuals who received a COVID-19 early release of up to $20,000 from their super amount to recontribute it without the money counting towards their annual non-concessional contributions cap. The contributions can be made between 1 July 2021 and 30 June 2030, but must not exceed the actual amount accessed early and cannot be claimed as a tax deduction for a voluntary personal super contribution.
Super rule changes starting 1 July 2020
Super Guarantee amnesty for employers
Employers are being offered a one-off opportunity to disclose and pay any unpaid SG amounts under an amnesty program administered by the ATO. The amnesty, which runs until 7 September 2020, permits employers to lodge an SG amnesty form to disclose SG contribution shortfalls for their employees for any quarter from 1 July 1992 to 31 March 2018.
Employers taking advantage of the amnesty will not incur the normal interest, administration charges and non-payment penalties of up to 200%. They can claim a tax deduction for any SG payments made by 7 September 2020
Removal of work test to age 67
From 1 July 2020, older super members will be able to make contributions into their super account without having to meet the requirements of the work test.
Following amendments to the SIS Regulations, fund members aged 65 and 66 can make personal non-concessional contributions into their super account without being gainfully employed for 40 hours in 30 consecutive days during the financial year in which they make their contribution.
Increased age limit to receive spouse contributions
As part of recent amendments to the SIS Regulations, the maximum age at which an SMSF member can receive a spouse contribution has been lifted.
From 1 July 2020, spouse contributions can be made until the receiving spouse reaches age 75 (up from the previous age limit of 69). Receiving spouses aged between 67 and 75 will still need to meet the requirements of the work test.
Temporary reduction in super pension minimum drawdowns
The government has again reduced minimum drawdown rates by 50% for account-based pensions and similar products in the 2020–21 income year.
Early release of super
From 1 July 2020, super fund members can access up to $10,000 of their super account if they are affected by the adverse economic effects of COVID-19.
Under the temporary access rules, you can access up to $10,000 of your superannuation savings. Applications must be made between 1 July 2020 and 24 September 2020 and are only available to members in accumulation phase, not retirement phase.
Super rule changes starting 1 July 2019
Insurance within inactive super accounts
Super funds are now required to cancel the insurance cover that goes with your super account if your super account is deemed to be inactive. Under new legislation, super accounts are considered inactive if they have not received any contributions or rollovers for more than 13 months.
Super funds are required to inform fund members they are at risk of having their insurance cancelled and must give them the option to retain their insurance cover even if they are not making regular super contributions.
Closure of inactive super accounts
If you have an inactive super account with a balance of less than $6,000, from 1 July 2019 it will be closed automatically and the balance transferred to the ATO, which will then use data matching technology to combine the low balance amount with one of your active super accounts.
Cap on fees for low balance accounts
Small super accounts with a balance of $6,000 or less at financial year-end will have their super fund fees capped at 3% per year.
Switching funds without exit fees
From 2019–20 exit fees in super funds will be banned, allowing you to switch your super fund without having to pay a penalty or fee.
Work test exemption for first year of retirement
From 1 July 2019, new retirees aged between 65 and 74 will be able to make voluntary contributions into their super account without needing to satisfy the work test. To qualify for the work test exemption, you must have had less than $300,000 in your super account at the end of the previous financial year.
The relaxation of the work test rules only applies once and you cannot make contributions in subsequent financial years without meeting the work test.
Carry-forward rules for concessional (before-tax) contributions starts
From 1 July 2019, super fund members can make catch-up concessional contributions into their super account using their unused concessional contributions cap amounts from previous years. To qualify, you must have a Total Super Balance of less than $500,000 on 30 June of the previous financial year and you must not have used all your $25,000 annual concessional contributions cap in the previous financial year.
Under these rules, you can carry-forward up to five years of unused concessional contributions caps for use in a later financial year.
Age Pension Work Bonus rises and extended to the self-employed
If you are receiving the Age Pension Work Bonus, you will get a lift in your work bonus payments from $250 to $300 per fortnight from 1 July 2019. The work bonus has also been extended to eligible pensioners earning income from active participation in self-employment.
Pension Loans Scheme expanded and interest rate reduced
From 1 July 2019, the eligibility criteria and withdrawal amounts for the Pension Loans Scheme (PLS) will be expanded to make the scheme available to more Australians of Age Pension age. Under the new eligibility rules, you must still qualify for one of the eligible pensions, but you can now have a payment rate of $0 for either of the Age Pension means tests (assets or income) or be receiving the maximum pension rate.
The withdrawal amount per fortnight is increasing from 100% to 150% of the maximum fortnightly pension rate.
From 1 January 2020, the interest rate on PLS loans has been reduced to 4.5% per year compound, down from the previous 5.25% per year compound rate.
Lifetime annuity means test change
Changes to the means test for lifetime retirement income streams or annuities comes into effect from 1 July 2019. Annuity payments are included in the Age Pension income test, but under the new rules only 60% of an annuity’s purchase price is included in the assets test, rather than the previous situation where the full purchase price is included. The assessment rate will reduce to 30% for people aged over 84.
End to anti-detriment deductions
Although anti-detriment payments were banned for any super fund member deaths from 1 July 2017, super funds could still make payments to eligible dependants for members dying prior to this date. From 1 July 2019, no anti-detriment payment deductions are available, regardless of when the member died.
Age Pension age rises to 66
From 1 July 2019, the age at which you qualify for the Age Pension rises to 66, with the eligibility rising six months every two years until it reaches age 67 for everyone on 1 July 2023.
Temporary reduction in super pension minimum drawdowns
In the wake of the COVID-19 pandemic, the government has temporarily reduced super pension minimum drawdown rates for 2019–20. This means from 22 March 2020, the minimum annual payment required to be made from an account-based pension or similar product is reduced by 50%.
Opting out of SG for multiple employers
From 1 January 2020, employees with multiple employers can apply to opt out of receiving the Superannuation Guarantee (SG) from some of their employers. The change helps high income earners avoid going over their concessional contributions cap by allowing them to exempt an employer from making SG contribution payments in quarters where their earnings would exceed the maximum super contributions base (MSCB).
Early release of super
From mid-April 2020, super fund members have been permitted to access up to $10,000 of their super account if they are affected by the adverse economic effects of COVID-19. You can apply to access up to $10,000 before 1 July 2020 if you are unemployed, eligible to receive certain government payments, made redundant, had your working hours reduced by 20% or more, or are a sole trader whose turnover was reduced by at least 20%.
Eligible fund members can apply to the ATO through myGov for a determination they can send to their super fund to receive the payment.
Changes to First Home Super Saver (FHSS) Scheme
From 1 July 2019, the rules governing the First Home Super Saver (FHSS) Scheme were amended to confirm it could only be used for Australian-based property.
Another amendment also confirmed individuals were permitted to sign a property contract up to 14 days prior to requesting release of their FHSS savings. The change was designed to make it easier for people to use the scheme when time is short, for example, when signing a contract at auction.
Super rule changes starting 1 July 2018
Downsizing your home to add to your super
From 1 July 2018, people aged 65 or over are allowed to make contributions into their super account of up to $300,000 ($600,000 for a couple) using the proceeds from the sale of their main residence.
Although downsizer contributions are considered non-concessional (after-tax) contributions, they are not counted towards your normal non-concessional contributions cap ($100,000 in 2020–21) and can be made regardless of whether you meet the requirements of the work test.
Using your super to save a home deposit
From 1 July 2018, any super contributions made into a super account as part of the First Home Super Saver (FHSS) Scheme can be withdrawn and used to help purchase a first home. Under the FHSS Scheme, first homebuyers can make voluntary contributions of up to $15,000 a year into their super account (to a maximum of $30,000 per person or $60,000 for a couple) and later withdraw them (plus the associated earnings) to help purchase a home.
Transfer Balance Account Reporting (TBAR) starts
From 1 July 2018, SMSFs with a member accessing a retirement phase income stream are required to start complying with the TBAR framework and report events affecting these members’ transfer balance cap. The frequency of reporting under the TBAR framework depends on the Total Super Balance of all members of the SMSF.
Super rule changes starting 1 July 2017
When it comes to super changes, they don’t get much bigger than the package of new rules that came into effect on 1 July 2017. These new rules represented one of the biggest ever shake-ups of the super system and included:
$1.6 million Transfer Balance Cap established
From 1 July 2017, the amount that can be transferred and held in a super fund member’s tax-free retirement phase account is capped at $1.6 million over a lifetime. Fund members receiving a pension or annuity valued at over this amount were required to transfer the excess back into the accumulation phase or pay additional tax.
Total Superannuation Balance introduced
From 1 July 2017, super accounts now have a Total Super Balance (TSB) calculated each year on 30 June to value a fund member’s assets across the entire super system. The TSB is used to track and limit the amount of savings you can have in the super system. The Total Super Balance consists of all accumulation phase super interests, the balance of your transfer balance account (basically your retirement phase pension), and any rolled over super benefits.
Capped defined benefit income streams introduced
From 1 July 2017, a new category of super pensions was created called capped defined benefit income streams. These pensions have special valuation rules for transfer balance cap and TSB purposes.
Reduced concessional contributions cap
On 1 July 2017, a new annual concessional (before-tax) contributions cap was set at $25,000 for everyone, regardless of their age. Concessional contributions were also defined to include employer contributions (SG contributions, salary-sacrifice payments and other amounts paid from pre-tax income such as administration fees and insurance premiums), personal tax-deductible super contributions, notional taxed contributions from defined benefit fund members and unfunded defined benefit contributions.
Division 293 (additional tax on concessional contributions) threshold lowered
From 1 July 2017, the threshold for paying Division 293 tax (an additional surcharge on concessional contributions) was reduced from $300,000 to $250,000. If you are liable for Division 293 tax, you pay an additional 15% on the amount of your concessional contributions over the $250,000 threshold.
Low income super tax offset (LISTO) introduced
The LISTO came into effect on 1 July 2017 as a renamed version of the existing Low Income Superannuation Contribution (LISC). LISTO acts as a refund for the tax paid on concessional contributions you or your employer make into your super account if your taxable income is less than $37,000. This means as a low income earner you pay no tax on your super contributions if you are eligible for LISTO. The ATO determines your eligibility.
Personal super contribution deduction available
From 1 July 2017, anyone aged under 75 can claim a tax deduction for personal contributions they make to super up to their annual $25,000 concessional contributions cap. If you are aged between 65 and 74, you need to meet the requirements of the work test. The $25,000 cap also includes employer and salary-sacrifice contributions.
Lower non-concessional contribution cap and new limit
From 1 July 2017, the annual non-concessional (after-tax) contributions cap was set at $100,000, with future increases to be in line with indexation of the concessional (before-tax) contributions cap. In addition, if your Total Super Balance is more than $1.6 million, you are ineligible to make additional non-concessional contributions without paying additional tax.
Anti-detriment payment abolished
From 1 July 2017, anti-detriment payments are banned for any super fund member deaths from that date. Super funds can make anti-detriment payments to eligible dependants up to 30 June 2019 for fund members who died prior to 1 July 2017.
Transition-to-retirement income streams taxed
From 1 July 2017, investment earnings on assets supporting a transition-to-retirement (TTR) income stream are no longer tax free, with a 15% tax applying until retirement.
Co-contributions eligibility expanded
From 1 July 2017, two additional criteria were added to eligibility to receive government co-contribution payments. The new criteria are your non-concessional contributions must not have exceeded the non-concessional contributions cap for that year and your TSB must not have exceeded the general Transfer Balance Cap ($1.6 million in 2019–20) on 30 June of the previous financial year.
Spouse contributions expanded
From 1 July 2017, the spouse superannuation tax offset was expanded by lifting the income threshold for an eligible receiving spouse to $40,000 per year.
Departing Australia Superannuation Payment (DASP) introduced
From 1 July 2017, super funds are required to apply a tax rate of 65% to the taxable component of a DASP. The tax-free component continues to be tax free.
Extension of tax exemption for other types of retirement products
From 1 July 2017, the tax exemption on earnings in the retirement phase was extended to products such as deferred retirement products and group self-annuities.