Budget changes related to Superannuation

Voluntary Super Contributions

The government announced that the work test for those aged 65 and 66 years will be removed from 1 July 2020 on voluntary super contributions. Currently people aged 65 to 74 can generally only make voluntary super contributions if they satisfy the work test.

An individual satisfies the work test in a particular financial year if they are employed for at least 40 hours in a period of not more than 30 consecutive days during the year in which the contributions are made. 

Please note, the current law does provide a limited work test exemption for recent retirees wishing to make voluntary super contributions from 1 July 2019 onwards. The exemption applies where all of the following requirements are met:

• The individual does not meet the work test in the contribution year
• The individual met the work test in the previous financial year
• The individual had a total super balance below $300,000 on 30 June of the previous year
• The individual has not previously relied on the work test exemption to make contributions

Bring Forward Rule for Non-Concessional Super Contributions:

Currently, those aged 65 and over cannot access the bring forward arrangements offered on non-concessional (i.e. after tax) super contributions. This will change to allow those aged 65 and 66 to make up to 3 years non-concessional contributions (without satisfying the work test).

The bring forward rule allows individuals to make non-concessional contributions up to 3 times the annual contributions cap in a single year, effectively using up their caps for the next 2 years. The bring forward cap and period depends on the individuals total super balance at 30 June of the previous financial year. 

Spouse contributions:

Individuals up to and including the age of 74 will be able to receive spouse contributions. Currently spouse contributions are limited to those aged 69 and under.

Insurance within Super Funds:

The government has announced a start date of 1 October 2019 for ensuring insurance within superannuation is only offered on an opt-in basis for super accounts with balances less than $6,000 and new accounts belonging to members under the age of 25 years.

This measure will help protect superannuation accounts of young people and those with low balances from erosion by insurance policies that are not needed or that they are unaware of.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.   

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