The SMSF Association (SMSFA) has endorsed the federal government’s changes to the Superannuation Industry (Supervision) (SIS) Regulations regarding the work test and the age limit for spouse contributions to retirement savings.
The changes to the SIS Regulations mean individuals will not have to satisfy the work test until age 67 to be eligible to make superannuation contributions. In addition, spouse contributions will be able to be made up to the age of 74.
Previously the regulations stipulated the work test be applied to individuals aged 65 and that spouse contributions could not be made after a member turned 69.
The amendments to the SIS Regulations enact announcements included in the 2019/20 federal budget and will take effect from 1 July 2020.
SMSF Association chief executive John Maroney said the changes have come at a good time considering the current economic landscape.
“These changes, which apply to contributions made from the 2020/21 financial year, are extremely timely considering the market and economic fallout from the COVID-19 pandemic,” Maroney said.
“It’s imperative that SMSF specialist advisers and trustees are alert to these amendments and incorporate them in their end-of-year planning.
“The amendments will give more flexibility to older individuals wanting to increase their contributions to superannuation to build adequate retirement savings.”
Further, he said the work test has been one of the administrative impediments for people reaching retirement age and amending it will alleviate some of the compliance obligations applying to them.
He noted the additional element allowing individuals aged 65 and 66 to trigger the bring-forward provisions associated with the non-concessional contributions caps will be dependent upon an amendment to the Income Tax Assessment Act 1997, but pointed out this proposed change to the legislation is currently before the House of Representatives and is expected to be ratified before 1 July this year.
The SIS Regulations were changed by the Superannuation Legislation Amendment (2020 Measures No 1) Regulations 2020, which was enacted last week.
