We have summarised the key points from the 2021-2022 budget, that we believe will have the most impact on our clients with regards to your superannuation.

Please keep in mind that all budget measures are proposals and will require the passage of legislation to become effective. 

2021 Federal Budget - Superannuation Summary

All the changes announced for Superannuation are positive and in the spirit of making super simpler and encouraging Australians to fund their own retirement. We look forward to all the measures being legislated.

No Work Test for Non Concessional Contributions

Effective 1 July 2022

In very welcome news, the Government will allow anyone aged 67 to 74 to make non-concessional contributions or salary sacrifice contributions without having to meet the work test. Existing Contribution Cap limits remain. Currently, if you are aged 67 -74 you can only make voluntary contributions if you meet a work test - and are working 40 hours in any 30-day period during the year you wish to contribute.

Unfortunately, the new measure is not expected to commence until 1 July 2022.

Once legislated, it will mean that anyone up to the age of 74 can make voluntary contributions to super subject to existing cap limits. Please note that people aged 67-74 who wish to make personal deductible contributions to super will still have to satisfy the existing work test.

This will provide for simpler contribution rules, and importantly allow older Australians to continue to save for retirement using super, up until age 74. This is a very welcome measure.

Downsizer Contributions

Effective 1 July 2022

The Government will reduce the eligibility age to make a downsizer contribution from 65 to 60 from 1 July 2022. The scheme allows a one-off, post-tax contribution of $300,000 per person from selling a house with contributions not counted towards the non-concessional cap. This means that anyone over the age of 60 may contribute up to $300,000 per individual from the sale of a principal place of residence as a Downsizer contribution. Please note that the normal rules around eligibility remain – if unsure, please contact one of our Wealth Managers to ensure you understand your position.

Super Guarantee Threshold

Effective 1 July 2022

The Government will remove the $450 per month minimum income threshold under which employees do not have to be paid the superannuation guarantee from 1 July 2022. The measure is expected to boost the superannuation savings of lower-income Australians, 63% of whom are women, however, will also lead to a reduction in take-home pay under most circumstances.

Given the amount of Super withdrawn under COVID measures in the past two years, this is good news for many casual or part-time workers trying to rebuild their super, although expected to commence from 1 July 2022.

Super Guarantee To Increase

Effective 1 July 2021

The Government has confirmed that the scheduled increase of the Super Guarantee Contribution rate from 9.5% to 10% will proceed from 1 July 2021. This is excellent news for employees, however, may be tough for some employers in the current environment. If you are currently salary sacrificing to super in addition to your Employer Super Guarantee Contributions, you may need to adjust your contributions accordingly.

Legacy Retirement Product Conversions

Effective from the first financial year after the date of Royal Assent of the enabling legislation

Again, in a move that will bring welcome simplicity and relief to people stuck in older super products, the Government will allow individuals to exit a specified range of legacy retirement products, together with any associated reserves, over a two-year period. The legacy retirement products include market-linked, life expectancy and lifetime products, but not flexi-pension products or a lifetime product in a large APRA-regulated or public sector defined benefit scheme.

Currently, these products can only be converted into another like product and limits apply to the allocation of any associated reserves without counting towards an individual’s contribution cap. This will allow people particularly in Self Managed Super Funds (SMSFs) to simplify their affairs, and in some cases remove unfair assessment of these products under the Transfer Balance Cap rules.

Social security and taxation treatment will not be grandfathered for any new products commenced with commuted funds. Amounts commuted from reserves will be taxed as an assessable contribution but will not count towards an individual’s concessional contribution cap or give rise to excess contributions. This measure will take effect from the first financial year after the date of Royal Assent of the enabling legislation, so we will watch this space with interest.

Relaxing residency required for SMSF's

Effective 1 July 2022

The Government will relax residency requirements for SMSFs and small APRA regulated funds by extending the central management and control test safe harbour from two to five years for SMSFs and removing the active member test for both SMSFs and small APRA funds. This measure is expected to commence from 1 July 2022.

Given the number of Australians who live and work overseas this is very good news, particularly when some Australians are having to remain overseas for longer than expected due to COVID.

The SMSF Association (of which we are members) advocated for the central management and control test to be increased from two to five years and for the active member test to be removed in their 2021 Federal Budget submission.

The SMSF Association advises that “removing this test significantly simplifies the residency rules for both SMSFs and small APRA funds. This measure will allow SMSF and small APRA fund members to continue to contribute to their superannuation fund whilst temporarily overseas, ensuring parity with members of large APRA regulated funds. The removal of the active member test means that as long as the fund was established in Australia (or holds an asset in Australia) and the central management ordinarily remains in Australia, an SMSF member can continue to contribute to a fund of their choice.”

First Home Super Saver Scheme (FHSSS)

Effective 1 July 2022

The Government will increase the maximum amount of voluntary concessional and non-concessional contributions able to be released from FHSSS accounts from $30,000 to $50,000 from 1 July 2022. This means all voluntary contributions made from 1 July 2017 up to the existing limit of $15,000 per year will count towards the total amount able to be released. The Government has also announced some minor amendments to the administration of the FHSSS to provide additional flexibility to the recipient and the ATO to make amendments to their application and withdrawal amount allowing an increase or decrease of the applied amount prior to a payment being made with no penalty to the recipient.

So far, the First Home Super Saver Scheme has not been a very popular method of saving for your first home deposit, and it will be interesting to see if the increased release amounts will make a difference. There are interesting strategies available to First Home Savers when you combine the ability to make catch up concessional contributions (if your Total Super Balance is under $500,000) with this scheme. If you are on a higher income and can make contributions to super for your future home, you should discuss this with one of our Wealth Managers. High net worth families with the ability to distribute income to their adult children, may also have a useful way of assisting with a house deposit in a tax-effective manner. If you would like to know more – please contact one of our Wealth Managers.

New Super Thresholds

Effective 1 July 2021

With all the ongoing Pandemic coverage it has been easy for most people to miss that several Super thresholds are increasing from 1 July 2021. These measures were already in place and in many cases are indexation of existing amounts flagged some years ago. It is useful to ensure you are aware of the new thresholds from 1 July 2021:

Measure From 1 July 2021 Current
Concessional Contribution Cap $27,500 $25,000
Non-Concessional Contribution Cap $110,000 (or $330,000 over 3 years, if eligible) $100,000 (or $300,000 over 3 years, if eligible )
Transfer Balance Cap $1,700,000 $1,600,000
Account Based Pension Payments Return to usual minimum payment levels Usual minimum payment levels halved due to COVID measures
Super Guarantee 10% 9.5%


We're here to help

If you have any questions or concerns about the proposals from the Federal budget announcements, please contact your Ulton Wealth Management Advisor to discuss.

Learn More

Want to learn more about the other announcements from the 2021 budget?

We have broken the full budget down into 6 main categories for usability.

Individual_Summary   Business_Summary   Superannuation_Summary   Social_Security_Summary   Economy_Summary    Other Summary-1


The Commonwealth of Australia, Budget 2021-22, https://budget.gov.au/

Australia Taxation Office, First home super saver scheme,   https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/first-home-super-saver-scheme/

SMSF Association 2021-2022 Federal Budget Summary https://www.smsfassociation.com/resource-library/2021-2022-federal-budget-update

FirstTech Federal Budget Briefing 11 May 2021, https://www3.colonialfirststate.com.au/adviser/platforms/news-and-updates/cfs-news/federal-budget-may-2021.html

Wealth Management Disclaimer

Our liability is limited by a scheme approved under Professional Standards Legislation, except where we provide financial services as an authorised representative of Ulton Wealth Services Pty Ltd (holder of Australian Financial Services License No. 497721). 
This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individuals needs and you should seek advice from your financial adviser before making any investment decisions. Sub Authorised Representative No.245052 of Ulton Wealth Management Pty Ltd. All Ulton Wealth Managers can provide financial services as Sub-Authorised Representatives of Ulton Wealth Management Pty Ltd. ABN 73 168 815 450 | Corporate Authorised Representative 460875 of Ulton Wealth Services Pty Ltd | ABN 86 614 308 628 | AFSL 497721.

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