Super update: The changes coming in 2023

A round-up of recent changes to super and the updates to come this year.

More people now eligible to make a downsizer contribution 

As of 1 January 2023, you’re now eligible to make a downsizer contribution if you’re 55. Previously, the eligibility age was 60 (and before that, 65).

The downsizer contribution is a government initiative which lets you contribute up to $300,000 as an individual or $600,000 as a couple to your super from the proceeds of selling your property. You can do this even when the usual contribution rules mean you wouldn’t normally be eligible to add to your super.

This initiative was designed to help older Australians move out of homes that are now too big for their needs, and also free up houses for younger Australians looking to buy.

This initiative was designed to help older Australians move out of homes that are now too big for their needs, and also free up houses for younger Australians looking to buy

There’s a lot to weigh up if you’re thinking of selling your home and making a downsizer contribution. See our guide to downsizer contributions.

The super guarantee rate goes up in July 2023

On 1 July 2022, the rate of super paid by employers to employees increased to 10.5% of the employee’s salary. 

From 1 July 2023, this will increase again, and all employers must pay all employees entitled to super 11% of their salary. 

To make sure you’re getting paid all the super you’re entitled to, log in to your super fund’s website and check your account. Bear in mind that super appearing on your payslip doesn’t mean it’s going into your account.

You can report any unpaid super to the ATO using their online tool.

The freeze on minimum super drawdown rates will end

If you have a super income stream, there are rules on the minimum amount you can withdraw (or drawdown) each financial year. Normally, this amount goes up slightly each year. 

Because of the disruption of COVID-19, the government temporarily reduced the superannuation minimum drawdown rates. This allowed retired Australians to keep more money in the tax-friendly environment of super. 

The temporary drawdown reduction will end on 1 July 2023. Your minimum drawdown rate will depend on your age. The government website and online tool portal Moneysmart has more information and a table which makes it easy to find your drawdown rate.

2022 changes

Another round of changes to super were introduced on 1 July 2022. These included:

• a boost to the First Home Super Saver Scheme
• removing the ‘work test’
• more Australians able to make a ‘bring forward’ non-concessional contribution  
• the end of the $450/month income threshold
• more flexibility in the Home Equity Access Scheme.

First Home Super Saver Scheme (FHSSS) boosted

As of 1 July 2022, you can now withdraw up to $50,000 per person from your super to buy your first home, up from the previous limit of $30,000 per person. 

A key point here is that you can only use super that you’ve contributed voluntarily, not any super your employer has paid on your behalf. Similarly, you can only contribute a maximum of $15,000 each year to use through this initiative, so you’ll need to plan well in advance. 

A key point here is that you can only use super that you’ve contributed voluntarily, not any super your employer has paid on your behalf

This little-known initiative can help you save on tax, but it’s complex. See our guide to how the FHSSS works.

Removing the ‘work test’

Up until 1 July 2022, Australians aged 67–74 could only make voluntary contributions to their super if they’d worked at least 40 hours during a 30-day period in the relevant financial year.

This change makes the retirement system more flexible for older Australians and incentivises those looking to continue to work. It makes it easier for people of retirement age to move money into super, which may mean they pay less tax.

More Australians can now make a ‘bring forward’ non-concessional contribution  

Since the start of the 2023 financial year, those aged between 67 and 74 can make use of the ‘bring forward’ non-concessional contributions rule. This option was previously only available to those aged 67 or younger.

A bring forward non-concessional contribution can be useful if you receive a windfall, like the sale of a house or an inheritance

This rule allows you to make three years’ worth of non-concessional contributions to your super in a single year without going over the cap. 

A bring forward non-concessional contribution can be useful if you receive a windfall, like the sale of a house or an inheritance, and you want to make a large one-off contribution to your super.

See our guide to the different types of contributions to super.