On 17 June 2021, Parliament passed legislation extending the ‘bring forward’ age limit to 65 and 66 (ie under age 67) for non-concessional contributions (announced in the 2019-20 Federal Budget). The legislation was also passed with Senate amendments relating to re-contributing amounts withdrawn from super funds, as a COVID relief measure, and repealing the ‘Excess Concessional Contributions Charge legislation (and some consequential changes).
See below for further details.
The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 awaits Royal Assent after being passed by both Houses on 17 June 2021 with 4 Senate amendments by One Nation.
The main part of the Bill implements the 2019-20 Budget measure to extend the ‘bring forward’ age limit to 65 and 66 (ie under age 67) for non-concessional contributions (NCC).
- The ‘cap’ on this type of contribution has been $100k pa and will be indexed to $110k from the start of the next financial year.
- The effect of the 3 year ‘bring forward’ is that $300k could be contributed this year, then no ‘non-concessional’ (not deductible) contributions in the next two years.
- From the 2020-21 financial year, individuals under age 67, in the financial year in which they make a non-concessional (non-deductible) contribution, can bring forward up to 3 times their annual non-concessional cap (then $330k), provided that they meet the other conditions.
Re-contribution of COVID-19 early release superannuation amounts
The One Nation Senate amendments to the Bill (agreed to by the Reps) related to a re-contribution of a COVID-19 early release amount received during 2019-20 or 2020-21.
- More importantly, the amendments allowed those who’ve made an early withdrawal of superannuation, in th e2020 or 2021 years, to recontribute it between 1 July 2021 until 30 June 2030, without exceeding the ‘Non-concessional Contribution Caps’ (NC Caps). It does this by introducing a new s292-103, as part of Subdiv 292-C of the ITAA 1997, which is about NC Caps and exceptions to them (for instance, it will follow the s292-102, which is about ‘Downsizer contributions’ (up to $300k) which are also an exception to the NC Cap).
- A corollary of this were amendments prohibiting taxpayers claiming a deduction for a s292-103 ‘recontribution’ of an early release amount. This was by inserting a new s290-169 of the ITAA 1997. This will be in Subdiv 290-C, which is about claiming deductions for ‘personal contributions’. It will follow s292-168, which prevents deductions for ‘re-contribution’ of ‘first home super saver scheme’ withdrawals.
Excess concessional contributions Charge abolished
The other One Nation amendments to the Bill have repealed the Superannuation (Excess Concessional Contributions Charge) Act 2013 in respect of excess concessional contributions from 1 July 2021. The amendments have also repealed s 26-74 of the ITAA 1997 which currently prohibits a deduction for the excess concessional contributions charge (ECC charge). The amendments apply to excess concessional contributions for a financial year starting on or after 1 July 2021.
Greater superannuation flexibility for Australians over 65
The Explanatory memorandum (to this Bill) noted that it implemented only one of 3 measures announced by the Government, to give Australians over 65, greater flexibility in their superannuation arrangements. It noted that new regulations – Superannuation Legislation Amendment (2020 Measures No. 1) Regulations 2020 will amend the SIS Regulations and RSA Regulations, implement the increases in the age
- at which the work test applies (from 65 to 67); and
- the cut-off age for spouse contributions (from 70 to 75).
The Treasurer issued a press release commenting on these and the Government’s other super related reforms.
[APH website: Bills Digest, Bill, EM, Covid Amendment, Excess CCC Charge Amendment, Schedule of Amendments; Treasurer’s website: media release; LTN 115, 18/6/21]
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