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Contribution Rules – What Has Changed For 2021/22?

Contribution Rules – What Has Changed For 2021/22?

Written by Ivan Fletcher – Senior Adviser

Another new financial year has commenced and with it come a few minor adjustments to the contribution rules. Some changes are obvious and some are more subtle.

Summary of Contribution Changes

Annual Living Costs2021/22
Concessional Contribution CAP$25,000$27,500
Non Concessional Cont. CAP$100,000$110,000
Work Test / or WT ExemptionRequired from Age 67Required from Age 67
Carry Forward Unused Concessional ContributionsBalance under $500,000 as at 30/6/20Balance under $500,000 as at 30/6/21
Bring Forward Rule$300,000$330,000
Bring Forward QualificationUnder Age 65 as of 1/7/20Under Age 67 as of 1/7/21
Downsizer ContributionOver Age 65Over Age 65
Total Super Balance Cap$1,600,000$1,700,000

Concessional Contribution Cap – $27,500

The concessional contribution cap (originally set at $25,000 from 1 July 2017) is indexed by Average Weekly Ordinary Time Earnings (AWOTE), in increments of $2,500 (rounded down) . This year is the first year indexation has occurred with the contribution cap increasing from $25,000 pa to $27,500 pa from 1 July 2021.

Carry Forward – Unused Concessional Contributions

There has been no change to this rule, which allows you to carry forward unused Concessional Contributions from the 2018/19 year onwards provided your Total super Balance (including all super and pension accounts) is under $500,000 as of 30 June 2021.

Non-concessional contribution Cap $110,000

The standard non-concessional contribution cap is calculated as four times the concessional contribution cap. Therefore, due to the increase in the concessional contribution cap from $25,000 to $27,500, the standard non-concessional contribution cap has increased from $100,000 to $110,000 from 1 July 2021.

Contribution Age Limit No Change

Between the age of 67 & 74 personal contributions (including salary sacrifice) cannot be made without satisfying either the Work Test of the Work Test Exemption.

Work Test – To satisfy the work test you need to have been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year.

Work Test Exemption – This is a once in a lifetime exemption and has very strict criteria as follows :

  • your Total Super Balance must be under $300,000 as of  close of the previous financial year (30 June 2021)  and : 
  • you have satisfied the work test (per above) in the previous financial year, and
  • you turned age 66 or higher in that year of the work test
  • you  have not made use of the work test exemption in a previous financial year.

3-Year Bring Forward Rule

There are 2 significant changes in regards to this rule.

  1. New Cap $330,000   Members may bring forward up to 2 years worth of non concessional contributions allowing for up to a total of $330,000 contributions in one year from 1 July 2021.
    HoweverIf you have triggered the 3 year bring forward rule in either 2019/20 or 2020/21 then the $300,000 CAP still applies for the 3 year period.  The revised cap of $330,000  is only applicable if the rule is triggered in this new financial year 2021/22.
  2. Age Capacity  Increased to age 66 or below (as of 1 July 2021)

In line with the Work Test for the regular Caps, Members aged 65 or 66 (previously age 64) ANY TIME during 2021–22 may now use the bring-forward rule regardless of their intentions for future gainful employment or retirement from the age of 67.

For example, a member who is age 66 (as of 1 July 2021) can still trigger the bring-forward rule and make a non-concessional contribution of up to $330,000 in the current financial year, even though they may not ordinarily be able to make contributions in the following 2 financial years due to being age 67 or older and not working.

Work Test Application (3-year rule)  –  Where a member triggers the bring-forward rule in the financial year that they reach age 67, the timing of such contributions will be determined by whether the member has met the work test or work exemption test during the financial year.

If the work test or work test exemption has NOT been satisfied, the member can only make contributions (and therefore trigger the bring-forward rule) prior to reaching age 67. If the work test or work test exemption has been satisfied, however, the member can trigger the bring-forward rule by making non-concessional contributions at any time during the financial year in which they reach 67 (including contributions made after their 67th birthday).

Total Super Balance Cap – Has Increased To $1,700,000

A person’s non concessional cap will be nil if their total super balance (inclusive of all super and pension accounts) on 30 June 2021 is $1,700,000 or more.  This has flow on effects to the application of the 3-year bring forward rule as summarised in the following table.

Total Super Balance
(30 June 2021)
Standard Non Concessional CapNumber of years that can be brought forwardMaximum Non Concessional Cap
Above $1,700,000NilNil
Between $1,590,000 and $1,700,000$110,000Nil$110,000
Between $1,480,000 and $1,590,000$110,0001 year$220,000
Less than $1,480,000$110,0002 years$330,000

Federal Budget Announcements – Proposed for 1 July 2022

The following changes have been proposed but not yet been legislated.  Time will tell if they come to fruition.

  • Downsizer Contribution – Age qualification to drop to age 60 (currently age 65 or above).
  • Partial Repeal of Work Test  – Individuals aged 67 to 74 to make or receive non-concessional or salary sacrifice superannuation contributions without meeting the work test, subject to existing contribution caps. However, individuals aged 67 to 74 years wanting to make personal deductible contributions would still have to meet the existing work test (or qualify for the work test exemption).

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