The federal government has locked in some changes to superannuation ahead of the budget today, as it continues to throw out sweeteners in the lead up to the federal election.
Australians approaching retirement will be able to make voluntary superannuation contributions without meeting the work test.
The work test currently mandates that Australians can only make voluntary contributions if they work a minimum of 40 hours over a 30-day period.
The measure makes getting money into superannuation, which is concessionally taxed, more flexible for those aged 65 and 66.
Federal Treasurer Josh Frydenberg said there are around 55,000 Australians aged 65 and 66 who will benefit from this reform in 2020-21.
Changes to age limits
The government has also announced it will change the age limit for spouse contributions from 69 to 74 years.
Currently, those aged 70 years and over cannot receive contributions made by another person on their behalf.
“We will also extend access to the bring-forward arrangements, which currently allow those aged less than 65 years to make three years’ worth of non-concessional contributions, which are capped at $100,000 a year, to their super in a single year. This will now be extended to those aged 65 and 66,” said Mr Frydenberg.
What else will be in the budget tonight?
As the Liberal Party heads into election mode, ahead of a likely early May election, various tax sweeteners are on the table for this evening’s budget.
For example, a reduction of marginal tax rates or an increase in the marginal rate thresholds are looking as very likely outcomes.
“While individual tax cuts could be seen as being election sweeteners, there are also good reasons to give individual tax cuts right now. These reasons include the reversal of bracket creep caused by inflation,” said BDO national tax director Lance Cunningham.
“There is a good argument that the reduction of individual taxes could give a boost to GDP as it would provide more disposable income for households to spend. The alternative to increase GDP is to promote the increase of wages, but unless there is a corresponding increase in productivity, this could be counterproductive by increasing inflation. Therefore, the reduction of the individual tax rates may be the better option,” he said.
You can read more about this here.
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