Allowing older Aussies to continue contributing to super

From 1 July 2020, individuals aged 65 or 66 will be able to make voluntary superannuation contributions (both concessional and non-concessional), without satisfying the work test. Currently, individuals aged 65 or older can only make voluntary contributions if the work test is met by working a minimum of 40 hours over a 30-day period.
shutterstock_793856074_retirement

Access to the three year “bring-forward” non-concessional contributions cap will also be extended to those aged 65 and 66. This will allow individuals to make three years’ worth of non-concessional contributions, currently $100,000 a year, to their super in one financial year (subject to the $1.6m total super balance threshold).

Furthermore, from 1 July 2020, the age limit for spouse contributions will be increased from 69 to 74 years.  Importantly though, the work test will still need to be satisfied to be eligible for this measure. Currently, those aged 70 years and over cannot receive contributions made by another person on their behalf.

Changes to the administration of exempt pension income

Superannuation funds that are partly in retirement phase currently face various administrative requirements when calculating the exempt current pension income (ECPI). From 1 July 2020, the Budget proposes to simplify these requirements and allow super funds to choose their preferred method of calculating ECPI. There is very little guidance in the Budget papers regarding the detail of this measure.

Government also proposes that from 1 July 2020, an actuarial certificate will no longer be necessary for calculating ECPI when using the proportionate method where the super fund is 100% in retirement phase for the income year. This announcement provides welcome clarity following the release of ATO publications regarding the need for an actuarial certificate for a fund to claim its ECPI in these circumstances.

Changes to SuperStream for super funds and SMSFs

In December 2018, the ATO released CRT Alert 093/2018 to announce the extension of SuperStream to SMSF rollovers. SuperStream broadly requires the electronic transmission of super money and data between employers, funds, service providers and the ATO.
The measure proposes to delay the original commencement date (30 November 2019) for SMSFs to compulsorily opt in to SuperStream to 31 March 2021. The Budget also proposes to change and expand the electronic SuperStream Rollover Standard (such as the release of money, transfer of information and money between employers, super funds, and the ATO).

Opt-in insurance within super

There is currently a Bill before Parliament that seeks to ensure insurance within superannuation is only offered on an ‘opt-in’ basis for:
• Super accounts with balances of less than $6,000; or
• Super accounts belonging to members who are under 25 years of age.

These changes were first introduced to prevent the erosion of low super balances and the superannuation of young people. The Budget proposes to delay the start date of this measure from 1 July 2019 to 1 October 2019.

This is in addition to the agreed amendments to extend the period after which an account that has not received any contribution, and is considered inactive, from 13 to 16 months, expand the definition of when an account is considered active, and the requirement for the ATO to consolidate to an active account within 28 days of receipt.

Published: 26 April 2019
by Brent Jones