The key changes proposed for SMSFs and superannuation are:
Greater flexibility for retirement contributions
From July 1 2020, Australians aged 65 and 66 will now be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the Work Test. Previously, this was only available to individuals below 65.
This will align the Work Test with the eligibility age for the Age Pension, which is scheduled to reach 67 from 1 July 2023. There are around 55,000 Australians aged 65 and 66 who will benefit from this reform in 2020-21.
This also includes extending access to the bring-forward arrangements to individuals aged 65 and 66 which allows individuals to make three years’ worth of non-concessional contributions to their super in a single year.
The Government has also increased the age limit for spouse contributions from 69 to 74. Currently, those aged 70 years and over cannot receive contributions made by another person on their behalf.
The Work-Test-Exemption which allows individuals a further year to voluntarily contribute to superannuation after they have finished working will still apply to individuals from 67 to 74.
Reducing red tape for superannuation funds — ECPI changes
The Government will streamline administrative requirements for the calculation of exempt current pension income (ECPI).
The Government will allow superannuation fund trustees with interests in both the accumulation and retirement phases during an income year to choose their preferred method of calculating ECPI.
This change will reduce unnecessary red-tape for SMSFs in pension phase.
Reducing costs for super industry by including superannuation release authorities in electronic SuperStream Rollovers
The Government will provide $19.3 million over three years from 2020-21 to the Australian Taxation Office (ATO) to send electronic requests to superannuation funds for the release of money required under a number of superannuation arrangements. This is an improvement on the current process which includes physical documentation.
The start date of SMSF rollovers in SuperStream will be delayed until 31 March 2021 to coincide with the expansion of the SuperStream.
Personal income tax changes
The Government will lower taxes for individuals by building on its legislated Personal Income Tax Plan announced in the 2018-19 Budget. The changes to the plan will provide immediate relief to low- and middle-income earners. Under the changes, the reduction in tax provided by the low and middle income tax offset will increase from a maximum amount of $530 to $1,080 per annum and the base amount will increase from $200 to $255 per annum for the 2018-19, 2019-20, 2020-21 and 2021-22 income years.
From 1 July 2022, the Government will increase the top threshold of the 19 per cent personal income tax bracket from $41,000, as already legislated, to $45,000.
From 1 July 2024-25, the Government will reduce the 32.5 per cent marginal tax rate to 30 per cent.
In 2024-25, the 37 per cent tax bracket will be abolished under the Government’s already legislated changes.
The changes can be summarised as follows: