New laws affecting SMSFs post 1 July 2021

The Government has implemented a range of changes to the SMSF laws with the majority of these commencing from 1 July 2021. This article outlines what these changes are and what they mean for SMSFs

Melissa Ramov, Maddocks Lawyers

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Change to bring-forward rule

Treasury Laws Amendment (More Flexible Superannuation) Act 2021 has made changes to the bring-forward measures to include individuals aged 65 and 66 within their scope.

The annual non-concessional contributions cap is currently $100,000 per year. This cap limits the amount of contributions that can be made each financial year. Individuals may be able to "bring-forward" an amount of their annual non-concessional contributions cap equal to two or three times the annual cap (i.e. up to $300,000) as long as they meet the eligibility criteria.[1]

In the past only individuals who were under 65 could access bring forward non-concessional contributions cap in a particular financial year. Now, by extending the scope of the rule to include individuals under 67, individuals aged 65 and 66 can benefit from the bring-forward rules. This change applies to non-concessional contributions made on or after [2]1 July 2020.

Removal of Excess Contributions Charge

If an individual exceeds the cap on concessional contributions, currently $27,500 for the 2021-2022 financial year contributions, then they will no longer be charged an Excess Contribution Charge (ECC). However, the amounts exceeding the cap will still be included in the individual's income tax return and taxed at the marginal rates but without the addition of the ECC.

Returning COVID-19 Early Release Amounts

From 1 July 2021, the Treasury Laws Amendment (More Flexible Superannuation) Act 2021 allows individuals who accessed the COVID-19 Early Release Amounts last year to recontribute the unused portion of the amount back into their super without counting that amount as a non-concessional contribution.[3]

Individuals who choose to re-contribute the amount into their super must notify their super fund in the approved form whether before or at the time of making the re-contribution.

Cut-off age for spouse contributions

The cut-off age for superannuation spouse contributions has changed from 70 to 75 meaning that the receiving spouse can now be up to 75 years old.[4]

Extension of reduced minimum pension drawdowns

[1] Section 292-85(3) ITAA 97.

[2] Section 292-85(3)(c) ITAA 97.

[3] Section 292-90(2)(c)(iiib) ITAA 97.

[4] Regulation 7.04(1) Item 3 SIS Regs.

Further, the Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 have passed and have extended the temporary reduction in minimum drawdown amounts of super pension accounts for another 12 months

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on a range of topics, such as:

• Superannuation Contributions - A Guide
• Superannuation Contributions and Income Tax - for Self-Managed Superannuation Funds
• Understanding - Contributions, Contributions Caps and Reserves

Order related document packages

• SMSF Minutes and Resolutions Package
• SMSF Pension Commutation
• SMSF Pension Pack
• Superannuation Trust (SMSF)
• Update to SMSF