If you’re one of the more than 1 million Australians with a self-managed super fund (SMSF), there are a few key issues to keep your eye on in 2022. Read on to find out what they are.
Your investment strategy
It’s a volatile time at the moment in investment markets as economies and businesses around the world deal with the havoc caused by ever-changing COVID-19 restrictions and circumstances. That makes it a good time to review your SMSF investment strategy.
It’s also no secret that the property market in Australia has boomed over the past couple of years despite all the uncertainty. One of the benefits of having an SMSF is that you can invest directly in property, provided you meet the eligibility requirements. You can also borrow to do so by taking out an SMSF loan called a limited recourse borrowing arrangement.
In addition, one of the requirements of being a trustee of your SMSF is to regularly review your investment strategy to ensure it continues to meet your needs (and those of the other fund members, if you have any).
If your needs (or any of your member’s needs) have changed over time, you should review your investment strategy. For example, if you or any of your fund members are getting close to retirement.
Changes to super legislation
Some critical changes will come into effect in July this year, including:
- – The compulsory employer super guarantee is increasing from 10 to 10.5%.
If you work for an employer, the employer must pay 10.5% of your wages/salary into your super fund from July 1.
- – A drop in the minimum age you can make a downsizer contribution from 65 to 60.
A downsizer contribution is the proceeds from the sale of your residential home up to the value of $300,000. You can voluntarily choose to put these funds into your SMSF if you sell your home.
- – The work test being abolished if you’re aged between 67 and 74.
Currently, if you’re between the ages of 67 and 74 and still working, you can only contribute to your super if you pass the ‘work test.’ To pass, you must work for at least 40 hours over a 30-day period in the year you make the contribution.
However, the work test will be scrapped on 1 July this year, and you’ll be able to make super contributions if you want to, and you’re in the 67 – 74 age bracket.
The Federal Budget in an election year
The Federal Budget is due to be delivered on March 29 this year, and the federal election is likely to be held in May. With older Australians being a significant voting demographic, it wouldn’t surprise if the Budget contained some superannuation sweeteners for both retirees and those approaching retirement.
The bottom line
It’s important to stay aware of changing investment conditions and any changes to super legislation so that you can make smart decisions for your SMSF.
If you’d like to discuss purchasing property inside super, please get in touch.
