It can be hard keeping up-to-date with current superannuation rules. And, yes, they’ve recently changed. Again!
So, let’s discuss the superannuation changes that came effective on 1 July 2021.
Increase to the Superannuation Guarantee contribution rate
The Superannuation Guarantee (SG) is the amount your employer must pay. If your employer doesn’t pay the minimum amount, they’ll be subject to the super guarantee charge.
On 1 July 2021, the SG rate went up from 9.5% to 10%. This will continue to rise over the next few years, as follows:
- 1 July 2022 to 30 June 2023: 10.5%
- 1 July 2023 to 30 June 2024: 11%
- 1 July 2024 to 30 June 2025: 11.5%
- From 1 July 2025: 12%
So, if you’re an employee, your employer should now be paying 10% SG contributions. It pays to check your payslips to ensure that you’re receiving the correct super amount. A stapled super fund is an existing fund that’s linked to an individual. This allows that fund to follow you when you change jobs. And it’s why it’s called stapling.
The reasoning behind this is to:
- reduce super account fees, and
- avoid opening new super accounts
every time you change jobs.
There are times when an employee starts a new job and doesn’t choose a super fund. When this happens, the employer can request stapled super fund details. That requests goes to the Australian Taxation Office.
This change came into force on 1 November 2021.
Increase in Self-Managed Super Fund members
From 1 July 2021, Self-Managed Super Funds (SMSF) can have six members. This is an increase from four.
If you’re wanting to increase your SMSF members from four to six, you’ll need to check the Trust Deed to see if it allows it.
Contribution Cap rises
Tax benefits ad concessions are available to those who contribute to their own super while working. But there’s a limit on the tax concessions you can claim.
Basically, if you contribute too much, you may end up paying extra taxes. This is what a contribution cap is.
The amount you can now contribute to your super fund has increased. There are two types of contribution caps, as follows:
- Concessional cap (before tax contributions) have increased from $25,000 to $27,500
- Non-concessional cap (after tax contributions) have increased from $100,000 to $110,000.
What’s the difference between a concessional cap and a non-concessional cap?
Concessional cap contributions include:
- Compulsory contributions. These are contributions your employer must make
- Salary sacrifice contributions. These are extra contributions you can ask your employer to make form your before-tax income
- Tax-deductible contributions. Voluntary contributions you can make using your after-tax money
Non-concessional contributions include personal after-tax contributions. These contributions use after-tax dollars which you don’t claim a tax reduction for.
Excess contribution charge
Under the old super fund legislation, you had to pay a charge if you exceed your contribution cap. From 1 July 2021, you’ll no longer have to pay such a charge. You’ll still need to pay extra tax though.
Re-contribution of COVID early release of super
Some people received an early release of super during the 2019-20 and 2020-21 financial years. Under the super fund changes, you’re able to re-contribute the amount you received. You can do this without that contribution counting towards your non-concessional cap.
Changes to the transfer balance cap
The introduction of the transfer balance cap was on 1 July 2017. It’s a lifetime limit on the amount of super that you can transfer into retirement phase income streams. This includes most pensions and annuities.
Before 1 July 2021, the transfer balance gap was $1.6 million. This has now been changed to $1.7 million.[vc_column_text]
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Important information: This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.
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