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If you have been making, or are thinking about making contributions to your spouse’s super, this is a change you’ll want to know about. The age limit to which you can continue to make contributions will now rise from 69 years to 74 years. And that means that you may be able to continue to help build your spouse’s super and if you and your spouse meet the eligibility criteria, be entitled to claim a tax offset of up to $450 for an additional five years.
A welcome change for members approaching retirement comes with the scrapping of the Work Test for making voluntary contributions to super for anyone between 65 and 67 years old.
This measure completely removes the requirement to work a minimum number of hours within a set time frame (previously 40 hours in 30 days) before you are eligible to make voluntary after-tax contributions to your super.
This means that Australians aged 65 or 66 years who don’t meet the work test, because they may only work one day a week or volunteer, will now be able to make voluntary contributions to their superannuation.1 The government has indicated that the move aligns the work test with the eligibility age for the Age Pension, which is scheduled to reach 67 from 1 July 2023.2
The Transfer Balance Cap is the total amount of funds that an individual can hold tax-free in the retirement phase of super.
The Transfer Balance Cap was initially set as $1.6 million in 2017–18 and is subject to indexation on an annual basis in $100,000 increments in line with the consumer price index.
Indexation of the transfer balance cap would have occurred on 1 July 2020 if the CPI figure for the December 2019 quarter was 116.9 or higher. In fact, the December 2019 figure was 116.2 and so the cap will not increase. The ATO now anticipates that the general transfer balance cap may be indexed on 1 July 2021.3
To read more about these changes and how they may affect you, take a look at our summary, 2019-20 Budget Changes – what this may mean for members on the ESSSuper website. You can also call our Member Service Centre on 1300 650 161 (Emergency service members) or 1300 655 476 (State super members).
1. Superannuation, Federal Budget 2019-20, PWC.2. What you need to know about super in 2020, Super boost: more flexibility for retirement;3. Indexation of the general transfer balance cap, Australian Taxation Office
The information contained in this article is of a general nature only. It should not be considered as a substitute for reading ESSSuper’s Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available on our website or by calling 1300 650 161.
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