Last night the Federal Treasurer, The Hon Josh Frydenberg MP, handed down the 2019-20 Federal Budget.
The big announcement from the budget was its forecast of a return to surplus – to the tune of $7 billion – next financial year. Other big announcements included:
- the more than doubling of the low- and middle-income tax offset,
- the extension of the instant asset write-off for SMEs, and
- a large-scale infrastructure spend over the next decade.
With regards to superannuation, the budget contained several measures that will benefit members nearing retirement:
Exemption from the work test for members aged 65 and 66:
From 1 July 2020, individuals aged 65 and 66 will not have to meet the work test in order to make concessional and non-concessional voluntary contributions. Currently, members have to work a minimum of 40 hours over a 30-day period to be eligible to make voluntary contributions to their super.
Access to the ‘bring forward’ rule extended to members aged 65 and 66:
Also from 1 July 2020, 65 and 66 year olds can utilise the bring forward rule whereby three years’ worth of non-concessional contributions (currently capped at $100,000 per year) can be made in a single year. Currently, this arrangement is only available to those under the age of 65.
Increasing the age limit on spouse contributions:
The age limit for spouse contributions will increase from 69 years to 74 years come 1 July 2020. Currently, members aged 70 years and above cannot receive spouse contributions.
Also, the recent passage of the Protecting Your Super Package through Parliament was done with the removal of provisions making insurance opt-in for accounts with balances of less than $6,000 and new accounts for members under the age of 25. The budget papers advise that these reforms, which are currently before Parliament, have a commencement date of 1 October 2019. If there is a change of government after the election, however, it remains to be seen if these proposals will be enacted.