Now the new financial year has started, many are still unaware of the new changes to Perth Superannuation. For the 2020/21 financial year there are two main changes:
1) the removal of the work test for anyone aged 66 and 67 years old who make personal non-concessional contributions
2) a spouse contribution extension to those aged between 70 to 75 years
1) Removal of the work test for people until age 67 From now onwards for those under the age of 67 years are eligible to make voluntary super contributions without needing to satisfy the work test.
This is an increase from the previous requirements of needing to be under the age of 65.
By removing this work test requirement it allows individuals aged 65 and 66 who are no longer working or working casually to be able to contribute to Perth Superannuation.
It may help these individuals with these additional few years to make contributions if they have not saved the amount they were aiming for.
2) Spouse contributions to Perth Superannuation changed from ages 70 to 75.
Contributing to your spouse’s super account is a way to build your retirement nest egg that you can both share as well as being able to potentially save yourself some tax in the process.
The recent change of lifting the age to 75 for spouse contributions provides individuals with a greater ability to contribute on behalf of their spouse, especially in the following instances:
• the contributing spouse has already reached their own $1.6 million total Perth Superannuation balance restriction
• where the recipient spouse is significantly older, as they can access a tax-free superannuation income stream whereas the younger spouse may not have yet met a condition of release, or
• the contributing spouse is eligible to claim a spouse tax offset of up to $540 as their spouse is a low-income earner. To calculate your actual tax offset, the ATO has a simple worksheet available on its website here. There is no limit to the amount someone can contribute to their spouse’s superannuation, provided the contributions do not exceed their spouse’s non-concessional (after-tax) contributions cap, however the tax offset is only on the first $3,000 contributions.
These Perth Superannuation changes are a bonus from these challenging times. However, we remain waiting for updates regarding the extension of the bring forward rule to the age of 67 years to become law in the coming months. Contact us today to find out more about how these new changes effect your Perth Superannuation.