Latest Superannuation Updates & Proposed Superannuation Changes01st Jun 2021
The 2021- 2022 federal budget have announced a number of updates and proposed changes that everyone should be aware and prepared to implement. The main issues include:
- EMPLOYER COMPULSORY SUPERANNUATION CONTRIBUTIONS TO INCRESE TO 10%
From 1st July 2021 the compulsory Superannuation Guarantee Contribution (SGC) will increase from the current 9.5% to 10%. SGC will continue to rise by 0.5 per cent per year thereafter until it reaches 12 per cent by 2025. Employers must ensure they are prepared after 1st July 2021 for the increased superannuation commitment.
- INCREASE IN THE CONCESIONAL & NON-CONCESSIONAL SUPERANNUATION CONTRIBUTION CAPS
From 1st July 2021 the Concessional (tax deductible) superannuation contribution caps will increase from $25,000 to $27,500 per year and the Non-Concessional (non tax deductible) superannuation caps will increase from $100,000 to $110,000 per year.
- SUPERANNUATION TRANSFER BALANCE CAP INCREASED TO $1.7 MILLION
From 1st July 2021 the Transfer Balance for any new account based pensions will be increased from $1.6 million to $1.7 million. Any current account based pensions will be able to increase proportionately on the unused cap percentage.
- SUPER DOWNSIZER CONTRIBUTION AGE HAS DECREASED
Currently, downsizer contributions to super can only be made by individuals aged 65 or older. The government has proposed lowering this age to 60. The measure will allow more older Australians to consider downsizing to a home that better suits their needs, while allowing to make a one off contribution into superannuation without any tax implication.
- REMOVAL OF THE $450 MINUMUM THRESHOLD
Under the current superannuation arrangements, if a person earns less than $450 per month from the one employer, they are not entitled to receive the superannuation guarantee. This is prosed to change that any payment of wages or salaries will automatically mean the Employer will have a SGC commitment. This proposed changes is expected to start 1st July 2022.
- “WORK TEST” FOR VOLUNTARY CONTRIBUTION WILL BE REMOVED
From 1st July 2022 individuals aged 67 to 74 can make voluntary contributions (both concessional and non-concessional) to their superannuation or receive contributions from their spouse without meeting meet the “work test”. Currently the work test involves at least 40 hours over 30 consecutive days in the relevant financial year.
- FIRST HOME BUYERS CAN SAVE MORE THROUGH SUPERANNUATION
From 1st July 2022 first home buyers can use up to $50,000 of their own contributions paid to their superannuation fund to help them get into the property market. Under the changes in the 2021-22 budget, up to $50,000 in voluntary contributions will be able to be released.
- RELAXING SMSF RESIDENCY REQUIREMENTS
The government is proposing to relax the residency requirements for self-managed superannuation funds (SMSFs) and small APRA-regulated funds. SMSF trustees living overseas will be able to maintain control of their funds for five years, up from two years previously, and the active member test will be removed for both fund types.
Please be aware that a number of the changes noted are proposals and will require parliament to pass the bills. We will keep you updated on any changes to the proposed legislation.
If you have any queries, please contact the Team at Simeoni.