Work test and downsizer changes to reduce super burden

The removal of the work test for making non-concessional contributions and the downsizer contribution changes announced in the Budget reduces discrimination for those wanting to contribute to their superannuation, according to Pitcher Partners. 

The accounting and business advisory firm’s partner, Ashley Davidson, said removing the work test for people aged 67 to 74 making non-concessional contributions, and allowing access to the three-year bring forward rule was the more important of the two changes. 

Davidson noted the work test had made it harder for people to direct any windfalls into super they might receive later in life.  

“Removing the work test is a good start in helping this cohort top up balances (which are still subject to the transfer balance cap) and while we would have liked to see the work test removed in its entirety to reduce complexity in the system, this is still a positive move,” he said. 

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He said expanding access to the downsizer contribution to those aged 60 could be attractive for those in a younger cohort who were “asset-rich but super-poor”. 

“Despite the name, there is also no need for downsizing to occur, and someone who sells a primary residence but upgrades their lifestyle is equally able to access the contribution, provided it is made within 90 days of the receipt of sales funds,” he said. 

“Together the two measures reduce the discrimination that applies to those who want to contribute to superannuation, but who only get access to sufficient resources at or after retirement. 

“By enabling older Australians to access the concessionally taxed superannuation environment, retirees have a much better chance of sustaining their savings for longer, which reduces the burden for everyone.”