Changes to Superannuation from 1 July 2021
There has been quite a few changes to super which can be quite beneficial in helping you boost your retirement funds. Below is a summary of the changes.
1. The employer contribution rate increased to 10%
The Superannuation Guarantee Contribution (SGC) by employers has increased from 9.5% to 10%. This year’s increase is part of the Government’s long term plan to increase the rate to 12% by 2025.
2. Contribution Caps have increased
Caps for both concessional (before-tax) and non-concessional (after-tax) contributions have been increased for the 2021/22 financial year – as shown in the table below.
| Cap type | 2020/2021 | 2021/2022 |
|---|---|---|
| Concessional cap (before tax contributions) | $25,000 | $27,500 |
| Non-concessional cap (after tax contributions) | $100,000 | $110,000 |
These cap increases can also benefit you if you are accessing bring forward arrangements (non-concessional contributions) or carry forward rules (concessional contributions).
If you have a salary sacrifice agreement with your employer whereby you sacrifice up to the concessional cap, you may need to review the agreement in light of these changes.
If you are insure on how this affects you, please do not hesitate to contact us.
3. The age limit for bring forward arrangements has increased to 67 years
The bring forward arrangements we mention above has increased the age limit from 65 to 67 years.
4. The excess contributions charge has been removed
From 1 July, individuals who exceed the contributions cap will no longer be charged with an excess contributions charged. They will still be issued with a determination and charged at their marginal rate on any excess concessional contributions amount less a 15% tax offset to account for the contributions tax already paid by their super fund.
5. Recontribution of COVID early release of super
Individuals who received a COVID-19 early release of super (for 2019/20 and 2020/21) will be able to re-contribute up to the amount their received without the contributions counting towards their non-concessional cap.
6. Changes to the transfer balance cap
The transfer balance cap has been increased from $1.6 million to $1.7 million. This affects the maximum amount of super an individual can transfer into retirement phase income streams during their lifetime (pensions)
As you can see above, there is quite a few changes from 1 July. To help you understand how this may affect you, or help you maximise these opportunities, please do not hesitate to speak with our team.
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