What’s changing with super on 1 July 2022

The Superannuation Guarantee (SG) will increase by 0.5 percent again to 10.5 percent on 1 July 2022. This follows its rise from 9.5 percent to 10 percent last 1 July 2021.

The SG – the money that your employer must contribute to your super on your behalf – will continue to increase by 0.5 percent each 1 July until it reaches 12 percent on 1 July 2025.

Originally legislated by the Gillard Government, the gradual increase was first scheduled to begin in 2015, but was put off until 2021 by the Abbott Government in 2014.

The increase is designed to ensure that our super balances keep up with the cost of living by the time current employees reach retirement, so they can enjoy a comfortable retirement.

Currently, an employer must make SG contributions to your super if you are over 18 and earn more than $450 before tax in a calendar month. On 1 July 2022, this rule will be scrapped – employers will be required to make SG contributions to an eligible employee’s super fund regardless of how much the employee is paid.

Originally announced in the 2021 Federal Budget, this change is aimed at bridging the super balance gap for people in part-time employment and those with lower incomes. In particular, the Government believes that removing the minimum threshold will improve retirement outcomes for women.

The measure follows the release of the Retirement Income Review in 2021, which found that, due to structural factors such as the gender pay gap and breaks in full-time employment, 63 percent of Australians affected by the threshold are women.

In extension to the $450 per month rule being removed, the Government has also removed the rule stating that only employees 18 years old or over need to receive the Superannuation Guarantee.

From 1 July, an employer will need to pay super for any employees under 18 if they work 30 or more hours in a week for that employer, regardless of how much they’re paid.

Currently, you must be aged 65 or above in order to make a downsizer contribution. From 1 July 2022, this age limit will be reduced to 60.

Downsizer contributions allow eligible individuals to make a one-off, post-tax contribution to their super of up to $300,000 from the sale of their home; in a couple, this means each person could contribute up to $300,000. These contributions do not count towards non-concessional contribution caps.

At the moment, an individual aged 67 to 74 can only make voluntary contributions into their super, or receive contributions to their super from their spouse, if they meet the ‘work test’, which asks that they work at least 40 hours over a 30 day period in the relevant financial year.

From 1 July 2022, individuals aged 67 to 74 will be able to make or receive salary sacrifice contributions and non-concessional contributions – that is, contributions made from their after-tax salary, such as those made via BPAY – without meeting the work test.

The usual contribution caps will still apply, and individuals will still have to meet the work test to make personal deductible contributions.

The Government introduced the First Home Super Saver Scheme (FHSS) in 2017 to help more Australians save for a deposit. Individuals are currently able to withdraw $15,000 worth of voluntary contributions they’ve made to their super in a financial year, up to a total of $30,000 in contributions (and related earnings) across all years, to buy their first home.

From 1 July 2022, the maximum amount of voluntary contributions that can be released under the Scheme will be increased from $30,000 to $50,000.

It’s important to note that there is a range of eligibility criteria you must fulfil in order to use the FHSS.