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The gender super gap and women’s wealth
Most people are familiar with the gender pay gap, the average difference between remuneration for working men and women....
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We have summarised the key points from the 2022-2023 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.
Sometimes no news is good news and it was a welcome relief this year, that superannuation has largely been left out of the Budget. The 2022-2023 Budget is “Australia’s Plan for a Stronger Future” and has targeted relief for cost-of-living pressures.
Age Pensioners and other social security recipients will receive a $250 cost of living payment in April 2022 (before the election). Anyone receiving the following payments or with the concession cards will receive the payment:
A person can only receive one payment even if in receipt of two or more benefits above. You must be an Australian resident and the payment is exempt from taxation. It is expected that the payment will assist 6 million people at a cost of $1.5 billion[1].
As a reminder, (since the 20th September 2021) the income test for the Commonwealth Seniors Health Card is:
There is no assets test and income is defined as Adjusted Taxable Income. This is your taxable income plus the deemed income on your Account Based Pension.
It may also be worth reviewing whether you are eligible for a part Age Pension, given that the Assets Test limit is now $901,500 for a couple homeowner and $1,118,000 for a couple non-homeowner. These limits are higher where the couple is separated due to illness. For singles the cut off is $599,750 of homeowners and $816,250 for non-homeowners. For Age Pension, Centrelink applies both an income and an asset test and whichever test provides the worst outcome, is the test used.
Extension of temporary reduction in superannuation minimum drawdown rates
From 01 July 2022
The current 50% reduction in minimum drawdowns from super pensions will be extended to 2023. While the Budget Papers say the Government has made the change, the Government will need to register a new regulation to amend the pension rules under the Superannuation Industry Supervision Regulations. It is unclear at this stage whether the Government will move to do this before calling the election or only if re-elected.
The table below shows the normal minimum drawdown versus current. We will have to wait for further announcements before being sure that the halved minimums will continue for 2022/2023.
| Age | Normal minimum percentages | 2021/2022 year |
| Under 65 | 4.00% | 2.00% |
| 65–74 | 5.00% | 2.50% |
| 75–79 | 6.00% | 3.00% |
| 80–84 | 7.00% | 3.50% |
| 85–89 | 9.00% | 4.50% |
| 90–94 | 11.00% | 5.50% |
| 95 or more | 14.00% | 7.00% |
This measure is expected to decrease receipts by $50.0 million and increase payments by $2.8 million[2] over the forward estimates period and is the Government's response to ongoing market volatility.
A number of contribution changes were announced in last year’s Budget and many of them have recently been confirmed. The following table summarises where these changes are up to:
| Announcement | Status | Effective date |
|
Removal of work tests for personal and voluntary employer contributions for members aged 67-75 |
Regulations registered and now law [3] | 01 July 2022 |
| Requirement for members aged 67-75 to satisfy a work test (or work test exemption) to claim a deduction for a personal contribution | Change now law [4] | 01 July 2022 |
| Reducing the eligibility age for downsizer contributions from 65 to 60 | Change now law [4] | 01 July 2022 |
| Removing the $450 per month superannuation guarantee eligibility threshold | Change now law [4] | 01 July 2022 |
| Maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme increased from $30,000 to $50,000 | Change now law [4] | 01 July 2022 |
| Two-year window to commute certain legacy complying income streams | Bill yet to be introduced | to be confirmed |
| Relaxing the residency requirements for superannuation funds by: - extending the central management and control safe harbour period from 2 years to 5 years - abolishing the active member test. | Bill yet to be introduced | to be confirmed |
It will be important that those over 60, carefully consider current super contribution rules in conjunction with the amended rules coming in from 1 July 2022. There are some interesting planning opportunities if you consider the difference in contributing before 30 June and after 1 July depending on your age. It is also important to understand that the removal of the work test from 1 July is only in relation to personal and voluntary employer contributions. In order to make personal deductible concessional contributions, you will still need to meet the work test.
I was interested to see that there was no mention of any freeze to the legislated increase of the Superannuation Guarantee in the Budget. Therefore, it looks like the Super Guarantee will increase to 10.5% from 01 July 2022, in line with the last amendment to the Superannuation Guarantee (Administration) Act 1992.
If you have any questions or concerns about the proposals from the Federal budget announcements, please contact your Ulton Wealth Management Advisor to discuss.
Want to learn more about the other announcements from the 2022 budget? Click on the links below to go through to the specific summary or view the entire summary here.
Sources:
[1] Budget 2022-2023, Australia’s Plan for a Stronger Future, Guaranteeing the essential services, page 9
[2] Budget Measures, Budget Paper No.2, 2022-2023, page 28
[3] Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022
[4] Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2022
https://www.servicesaustralia.gov.au/income-test-for-commonwealth-seniors-health-card?context=21966
https://www.servicesaustralia.gov.au/assets-test-for-pensions?context=22526
FirstTech, Federal Budget Briefing 29 March 2022
MLC, 2022 Federal Budget Adviser Analysis, 29 March 2022
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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