We have recently updated the pages on our website to reflect the changes of super regulations and important super thresholds for the new Financial Year. This page provides a summary of the updates as well as the links to the relevant webpages.
The government has enacted legislation to support its economic response to Covid-19 to help the economy withstand and recover from the economic impact of Covid-19. Among the main changes that affect SMSF members are the early access to superannuation of up to $10,000 and the reduction of Pensions minimum withdrawal requirement by 50% for the 2019/2020 and 2020/2021 Financial Year.
If your SMSF owns a rental property or has a limited recourse borrowing arrangements, temporary rental relief or loan payment relief may be applicable for your SMSF. While this would normally trigger a range of SIS Act compliance breaches, the ATO indicated that it would not be taking compliance action for either the 2019/2020 or 2020/2021 Financial Years if certain requirements are met.
For more information on the changes and frequently asked questions in relation to Covid-19, please click here. For more information on the requirements for rental relief or loan payment relief, please click here.
Work Test Age
Before 1 July 2020, if you are aged between 65 and 74, you must meet a work test or be eligible for the work test exemption in order to make voluntary contributions such as personal contributions or salary sacrificed contributions. The work test requires an individual to be gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in that financial year.
From 1 July 2020, the requirement of work test only applies if you are aged between 67 and 74. This means if you are aged between 65 and 66, you can make voluntary contributions without having to pass a work test provided you meet other eligibility criteria.
For more information on work test and contributions, please click here.
Spouse Contribution Age
Before 1 July 2020, you can claim a tax offset of up to $540 if you make contributions on behalf of your spouse who is earning a low income and under 70 years old when the contributions were made.
From 1 July 2020, the age limit for spouse contribution has increased to 75. This means you can make contributions on behalf of your spouse if your spouse is under age 75, subject to meeting the work test or the work test exemption criteria if your spouse is aged between 67 and 74.
For more information on spouse contribution, please click here.
Co-contribution Income Thresholds
If your income is within the predetermined thresholds and you make a non-concessional contribution in a Financial Year, the government will match your contribution with a co-contribution up to certain limits. The income thresholds are indexed for the 2020/2021 Financial Year with the lower income threshold increased to $39,837 and the higher income threshold increased to $54,837.
For more information on co-contributions and the eligibilities, please click here.
Low Rate Cap
When you are between your preservation age and 60 years old, the tax on Lump Sum withdrawals made (provided you are eligible) is affected by the low rate cap amount. The taxable component of the amount withdrawn which is below the low rate cap amount is tax free. The low rate cap amount for the 2020/2021 Financial Year has increased to $215,000.
For more information on low rate cap and how it affects the tax payable on Lump Sum withdrawals, please click here.