The end of another federal election cycle has brought renewed certainty around superannuation regulations for individuals, and many are also relieved at the somewhat surprising election result.

Labor had intended to re-introduce the controversial 10 per cent rule for super contributions – removed by the Liberal Government in May 2017 – which prohibited personal tax-deductible contributions from individuals deriving at least 10 per cent of their income from salaried employment.

“Notably, the Labor Party had wanted to re-introduce this rule, which made no sense at all for salaried workers wanting to increase their retirement saving," says financial adviser Bruce Brammall.

"It operated unfairly against employees, whose only option was to salary sacrifice into superannuation, but not all employers offer that as an option, and nor do they have to."

While this situation will continue, there are several changes coming into effect from the start of the new financial year, which starts on 1 July.

As of this date, employees will be able to 'top up' their personal tax-deductible contributions to the maximum limit of $25,000, bringing the rules in line with those that have applied to self-employed members for several years.

“This means that if you have surplus cash, and have not maxed out your contribution limits, you should consider if this is a worthwhile strategy,” says Elise Treagus, a financial planner with Wakefield Partners.

Playing catch-up

The introduction of catch-up contributions during 2019-2020 is another significant change, enabling individuals to carry forward unused concessional contributions caps from previous years.

This will apply to people whose total superannuation balance (TSB) was less than $500,000 on 30 June of the previous financial year. Any unused amounts will expire after five years.

“That means that from fiscal 2023, you will be able to contribute up to $125,000 into your superannuation if you carry forward four years’ worth of $25,000 confessional superannuation contributions, in addition to the one that will apply in 2022-23," says Brammall.

"Taxpayers will be able to use that concessional contribution to contribute into their super and potentially reduce any capital gains or lump sum income payments and therefore reduce their taxable income.”

Another key change is that from 1 July 2019, retirees aged between 65 and 74 with a superannuation balance below $300,000 will be allowed to make voluntary super contributions for the first year that they no longer meet the work test requirements.

Under this criteria, individuals are required to work at least 40 hours within a 30-day period in a financial year to be eligible to make superannuation contributions.

From 1July, accounts classified as low balance – those with less than $6,000 – will have their fees capped at 3 per cent.

In more good news, all super fund exit fees will be banned. Individuals were charged around $52 million in exit fees in the 2016-2017 financial year alone, according to figures from the Australian Prudential Regulation Authority.

Wash sale crackdown

While many members of APRA-regulated funds will welcome these measures, self-managed super fund trustees and equity investors should bear in mind the Australian Tax Office's policing of the 'wash sale' rule.

This term refers to the practice of selling shares before the end of the financial year, then quickly re-purchasing them in the new fiscal year to minimise tax.

“The ATO is likely to look at the intention behind selling the shares. If the sole purpose of the sale and repurchase was only to avoid a capital gains tax bill, the ATO may disregard the capital loss,” says Wakefield's Treagus.

She notes the time period between the sale and repurchase of the shares must be reasonable, because the ATO is boosting its surveillance of share transactions to capture those abusing the loophole.