What's in store for super in 2020
About the author:
- Author name:
- By Terri Bradford
- Job title:
- National Manager Wealth Management
- Date posted:
- 22 January 2020, 1:29 PM
The new year brings in some new changes for superannuation. Let's review the year ahead.
1. Salary Sacrifice and Super Guarantee Contributions
Legislation was passed to ensure that from 1 January 2020 employers cannot reduce an employee's Super Guarantee (SG) entitlement if the employee salary sacrifices part of their salary or wages into super as a contribution.
The employer must still contribute 9.5% on total salary or wages on behalf of each eligible employee, regardless of any salary sacrifice arrangements in place.
The amendments improve the integrity of the superannuation system by ensuring that the employee's salary sacrifice contributions cannot be used to reduce an employer’s minimum SG contributions.
2. Employees with Multiple Employers
Legislation also passed last year allowing employees with multiple employers to opt out of receiving SG payments to avoid unintentionally breaching their concessional contributions cap.
While the rules are backdated to a 1 July 2018 start date, the ability to apply for opt out can really only occur this year, 2020.
This is because the due date for lodging an application is 60 days before the first day of the quarter to which the application relates.
If an employee wishes to apply for opt out, he or she would need to do so before end January 2020 to meet the deadline for the next quarter April to June 2020.
3. Retirees and the Work Test
From 1 July 2020, retirees aged 65 and 66 will be able to make voluntary super contributions without having to meet the 40 hour work test. This measure was part of the 2019 Federal Budget proposals.
The change aligns the work test with the eligibility age for the age pension, which is scheduled to reach 67 from 1 July 2023
There may be no need to introduce legislation to enact this change as the Government has indicated they may simply amend the superannuation regulations.
4. Spouse Contributions
The Government also announced in last year's Federal Budget they will increase the age limit on spousal contributions from 69 years to 74 years from 1 July 2020. Currently, spouses aged 70 and over cannot receive contributions made by another person on their behalf.
As with the work test, the Government has indicated it may amend the superannuation regulations to enact this change.
5. SMSFs and Exempt Pension Income
From 1 July 2020, SMSF Trustees will be able to choose which accounting method they wish to use to calculate exempt current pension income (ECPI) for funds held in both accumulation and retirement accounts.
Actuarial certificates may also not be required where the fund holds 100% of accounts in the retirement phase.
Feel free to contact your Morgans adviser if you wish to discuss the above changes and how they may relate to you.
You can access more analysis by clicking on 'Wealth Management' in the popular topics list. Alternatively, contact your Morgans adviser or nearest Morgans branch.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.