This new financial year, the ATO is rolling out updates to superannuation and trust distributions. Here are the key changes that will commence on 1 July 2022:

Increase of the Superannuation Guarantee to 10.5%

The Superannuation Guarantee (SG) rate will rise from 10% to 10.5% on 1 July 2022 and will continue to increase by 0.5% each year until it reaches 12% on 1 July 2025.

Removal of the $450 superannuation contributions cap

Currently, you don’t have to pay superannuation for most employees who make less than $450 per month. However from 1 July 2022, the $450 threshold test will be removed, and employees aged 18 or over will need to be paid superannuation regardless of how much they earn.

It’s important to note too that from 1 July 2022, super will be payable to employees under 18 if they work more than 30 hours per week regardless of how much they earn.

Trust distributions to companies

The ATO recently released a draft tax determination dealing specifically with unpaid distributions owed by trusts to companies. The new guidance applies to trust distributions arising on or after 1 July 2022.

Distributions made to companies on or after that date will be treated as Division 7A loans if left unpaid. The precise timing of the Division 7A loan will depend on the wording of the resolution to pay the distribution.

Work-test removed – enabling those under 75 to contribute to super

Currently, a work test applies to superannuation contributions made by people aged 67 or over. However, from 1 July 2022, this work test has been removed and individuals aged under 75 years will be able to make or receive non-concessional or salary sacrifice superannuation contributions. These contributions are subject to existing contribution caps.

The work test will still apply to personal deductible contributions.

Please contact us if you’d like to know more or if you have any questions.