Expert SMSF insights
The latest on changes to the work test age and bring forward rule
By Anthony Cullen
As part of its initiative to provide greater flexibility for older Australians, the Federal Government announced proposed changes to super contributions for older Australians in the 2019/20 budget. These announcements included;
- Increasing, from 65 to 67, the age at which the work test starts to apply for voluntary contributions
- Increasing, from 65 to 67, the age at which the non-concessional ‘bring forward’ option cuts out
- Increasing the age limit for spouse contributions from 69 to 74
All these changes were slated to take effect from 1 July 2020.
Exposure Draft Bills and Regulations were issued for consultation on 5 March 2020. The number of Parliamentary sitting days remaining after the month-long consultation period was limited but, there was hope that the changes would be implemented before the end of the financial year to provide certainty for those members impacted by the changes.
Subsequent to this, the adjourning of the Federal Parliament as a result of the COVID-19 pandemic raised concerns that the changes would not eventuate in a timely manner. As restrictions lifted, we saw Parliament return, albeit briefly in mid-May and June.
The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 was introduced to the House of Representatives on 13 May 2020. The purpose of this bill is to legislate the amendments to the bring-forward rule provisions within the Income Tax Assessment Act 1997.
Changes to Regulations, on the other hand, do not need new legislation to be introduced to Parliament. A legislative instrument is generally all it takes. To this end, the Superannuation Legislation Amendment (2020 Measure No. 1) Regulations 2020 was registered on 28 May 2020. These measures see the necessary changes to the Superannuation Industry (Supervision) Regulations 1994. Subject to any objections by either house of Parliament (really only the Senate), this means that the increase in the work test & spouse contribution acceptance ages are now law, with effect from 1 July 2020, as originally intended.
Unfortunately, as at the adjournment of Parliament on 18 June 2020 we are no closer to seeing the tax law changes legislated with the bill still to progress from the House of Representatives. Further to this, neither House is scheduled to sit again until Tuesday 4 August 2020.
For at least a short period of time from 1 July 2020, superannuation members aged 65 or 66 will be in a position that they may be eligible to make contributions to their super funds without satisfying the work test but, are unable to utilise the bring-forward provisions.
More to come.
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