Superannuation

Ready Reckoner: Superannuation caps 2022–23

Written by The Tax Institute’s Tax Policy and Advocacy Team

   

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Superannuation caps and thresholds

From 1 July 2022, a range of superannuation caps and thresholds increased due to indexation. While the uplifts in the caps and thresholds are welcome, they will be accompanied by increased complexity as practitioners and taxpayers navigate the impact of the changes.

Legislative references:

  • Income Tax Assessment Act 1997 (ITAA 1997)
  • Superannuation Guarantee Administration Act 1992 (SGAA)
  • Superannuation Industry (Supervision) Regulations 1994 (SISR)

Table 1: Contributions caps and thresholds

Contributions caps and thresholds

2021–22

2022–23

Concessional contributions (CC) cap1

$27,500

$27,500

General non-concessional contributions (NCC) cap2

$110,000

$110,000

General NCC cap under 3-year bring forward rule3
(see Table 2)

$330,000

$330,000

Carry forward of unused concessional contributions — total superannuation balance (TSB) just before the start of the financial year4

< $500,000

< $500,000

CGT cap amount5

$1,615,000

$1,650,000

Division 293 tax threshold6

$250,000

       $250,000

Government co-contribution7:

  • Maximum amount
  • Lower income threshold
  • Higher income threshold

 

$500

$41,112

$56,112

 

                $500

            $42,016

            $57,016

Low income superannuation tax offset7 where adjusted taxable income does not exceed $37,000

Up to $500

Up to $500

Work test exemption for those aged 67–74 (only in their first year of retirement) — based on TSB of individual at the end of the previous financial year8

$300,000

$300,0009

Table 2: Bring forward rule (non-concessional contributions)

Bring forward period: 2020–21 to 2022–23
Total superannuation balance on 30 June 2020

NCC cap for
 2020–21
(first year)

Maximum bring forward period

Less than $1.4 million

$300,000

3 years

$1.4 million to less than $1.5 million

$200,000

2 years

$1.5 million to less than $1.6 million

$100,000

No bring forward period — general NCC cap applies

$1.6 million or more

Nil

Not applicable

 

Bring forward period: 2021–22 to 2023–24
Total superannuation balance on 30 June 2021

NCC cap for
 2021–22
(first year)

Maximum bring forward period

Less than $1.48 million

$330,000

3 years

$1.48 million to less than $1.59 million

$220,000

2 years

$1.59 million to less than $1.7 million

$110,000

No bring forward period — general NCC cap applies

$1.7 million or more

Nil

Not applicable

Points to note — bring forward rule

1. An individual will trigger the bring forward rule for a financial year (the first year) if:10

  • their non-concessional contributions for the first year exceed the general NCC cap;
  • their TSB immediately before the start of the first year does not exceed the general transfer balance cap (TBC);
  • they are under 75 years at any time in the first year (see Note 3 below);
  • they have not already triggered the bring forward rule in either one of the previous two financial years before the first year; and
  • the difference (the first year gap space) between the general TBC for the first year and their TSB immediately before the start of the first year exceeds the general NCC cap for the first year.

2. The Treasury Laws Amendment (More Flexible Superannuation) Act 2021 extended the bring forward rule by enabling individuals aged 65 and 66 to make up to three years of NCC under the bring forward rule. The measure applies to contributions made on or after 1 July 2020. Prior to 1 July 2020, the bring forward rule was available only to those individuals aged under 65 years at any time in a financial year.

3. The Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2022 further extended the bring forward rule. For contributions made on or after 1 July 2022, an individual who is aged less than 75 years at any time in a financial year may be able to make non-concessional contributions of up to three times the annual non-concessional cap in that financial year. If they are aged 75 years or older, the fund may be able to accept only mandated employer contributions and downsizer contributions.

4. The bring forward rule is subject to the individual’s TSB on 30 June of the previous financial year. If an individual is aged 75 years or older on 1 July of the financial year (from 1 July 2022), they cannot access the bring forward rule.

5. Once the bring forward arrangement is triggered in a year, any change to the NCC cap for the bring forward period does not apply. The bring forward cap amount is set based on the cap in the first year of the bring forward period.

While the NCC cap in the second and third year of a bring forward period started in 2019–20 or 2020–21 will change to $110,000 due to indexation, that individual’s NCC cap will still be $300,000 ($100,000 × 3 years) and does not increase to:

  • $310,000 ($100,000 + $100,000 + $110,000); or
  • $320,000 ($100,000 + $110,000 + $110,000).

Table 3: Transfer balance cap

Transfer balance cap

2021–22

2022–23

General transfer balance cap11

$1,700,000

$1,700,000

Defined benefit income cap12

$106,250

$106,250

Table 4: Superannuation guarantee charge

Superannuation guarantee charge

2021–22

2022–23

Charge percentage

10%

10.50%13

Maximum contribution base per quarter14

Annual equivalent

SG amount per annum

$58,920

$235,680

$23,568

$60,220

$240,880

$25,292.40

Monthly salary and wage threshold15

$45016

N/A

Table 5: Benefit payments

Benefit payments

2021–22

2022–23

Minimum annual drawdowns for a superannuation income stream (pension)17

Age of beneficiary in years | Standard drawdown rate

Under 65                                                                      4%

65–74                                                                           5%

75–79                                                                            6%

80–84                                                                           7%

85–89                                                                           9%

90–94                                                                          11%

95+                                                                              14%



Legislated18

2%

2.5%

3%

3.5%

4.5%

5.5%

7%



Legislated19

2%

2.5%

3%

3.5%

4.5%

5.5%

7%

Low rate cap amount20

$225,000

$230,000

Untaxed plan cap amount21

$1,615,000

$1,650,000

Disregarded small fund assets (prohibited from using segregation rule for tax purposes) — where the TSB of the individual just before the start of the financial year exceeds:22

$1,600,000

$1,600,000

Preservation age23

Date of birth:

Before 1 July 1960

1 July 1960 – 30 June 1961

1 July 1961 – 30 June 1962

1 July 1962 – 30 June 1963

1 July 1963 – 30 June 1964

From 1 July 1964

 

Preservation age

55

56

57

58

59

60

 

Footnotes

1 Section 291-20(2) of the ITAA 1997.

2 Section 292-85(2)(a). The general non-concessional contributions cap is set at four times the concessional contributions cap.

3 Section 292-85(3) of the ITAA 1997.

4 Section 291-20 of the ITAA 1997.

5 Section 292-105 of the ITAA 1997.

6 Section 293-20 of the ITAA 1997.

7 See the Superannuation (Government Co-contribution for Low Income Earners) Act 2003.

8 Regulations 7.04(1A) of the SISR.

9 From 1 July 2022, if you are under 75 years of age, you no longer need to meet the work test to make or receive non-concessional contributions and salary sacrifice contributions. This threshold does, however, continue to apply to those aged 67–74 in their first year of retirement who have a TSB of less than $300,000 at the end of the previous financial year who want to make a personal deductible contribution.

10 Section 292-85(3) of the ITAA 1997.

11 Section 394-35(3) of the ITAA 1997.

12 Section 303-4(1) of the ITAA 1997. The defined benefit income cap is set by dividing the general transfer balance cap by 16.

13 Legislated to increase to 11% on 1 July 2023; 11.5% on 1 July 2024; and 12% from 1 July 2025 onwards.

14 Section 15 and s 19(4) of the SGAA.

15 Section 27(2) of the SGAA.

16 The $450 monthly income threshold, below which employees did not have to be paid the superannuation guarantee by their employer, was removed from 1 July 2022. This measure was given effect by Schedule 1 to the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2021, which received Royal Assent as Act No. 12 of 2022.

17 Schedule 7 to the SISR.

18 As part of the response to the COVID-19 pandemic, the Government responded immediately and reduced the superannuation minimum drawdown rates by 50% for the 2019–20 and 2020–21 financial years. The changes were made by Schedule 10 to the Coronavirus Economic Response Package Omnibus Act 2020 which received Royal Assent as Act No. 22 of 2020.

The Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2021 amended the SISR to give effect to the measure announced on 29 May 2021 to extend the temporary reduction in minimum payment amounts for account-based pensions by half for the 2021–22 financial year. This measure extended to 30 June 2022 the Government’s response to the Coronavirus pandemic made for the 2019–20 and 2020–21 financial years.

19 The Superannuation Legislation Amendment (Superannuation Drawdown) Regulations 2022 amend the SISR to give effect to the Federal Budget 2022–23 measure to extend the temporary reduction in minimum payment amounts for account based pensions by half for the 2022–23 financial year. This measure is in response to ongoing financial market volatility and extends to 30 June 2023 the Government’s earlier response to the COVID-19 pandemic made for the 2019–20, 2020–21 and 2021–22 financial years.

20 Section 307-345 of the ITAA 1997. The low rate cap amount is the limit set on the amount of taxable components (taxed and untaxed elements) of a superannuation lump sum payment that can receive a lower (or nil) rate of tax. It applies to members that have reached their preservation age but are aged less than 60 years. It is a lifetime cap that is reduced by any amount previously applied to the low rate threshold.

21 Section 307-350 of the ITAA 1997.

22 Section 295-387 of the ITAA 1997.

23 Regulation 6.01(1) of the SISR.

Publish date: 14 July 2022

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