It can be hard staying current with current super rules. And yes, they have changed again. So, let’s talk about the changes to your super that came into effect from 1 July 2021.
Here are the changes to your super you may or may not have noticed…
1. Superannuation Guarantee contribution rate increase
From 1 July 2021, the Superannuation Guarantee (SG – Or amount your employer has to pay) rate will increase from 9.5% to 10%. This is set to continue for a number of years to come, so you can expect the rate to keep going up like so:
- 1 Jul 2022 to 30 Jun 2023: 10.5%
- 1 Jul 2023 to 30 Jun 2024: 11%
- 1 Jul 2024 to 30 Jun 2025: 11.5%
- From 1 Jul 2025: 12%
So, if you’re an employee, your employer should now be paying 10% SG contributions. It’s better to check your payslips to ensure you’re receiving the correct amount of super contributions. A stapled super fund is an existing fund that’s linked to an individual. It’s like a financial safety net. It reduces super account fees, and it avoids having to open a new super account every time you change jobs. If this occurs, the employer can request stapled super fund details. The request goes to the Australian Taxation Office. This change came into effect on 1 November 2021.
2. Self-Managed Super Fund members increase
From 1 July 2021, SMSFs can have up to six members. This is an increase from four. If you’re wanting to increase your members from four to six, you’ll need to check the Trust Deed to see if it’s allowed.
3. Rises in the Contribution Cap
The new super tax concession is that you’re entitled to a percentage of your taxable income when you contribute to your super. However, the new contribution limit has increased. There are two types of contribution limits, as per below:
- The Concessional cap – before tax contributions – had an increase from $25,000 to $27,500
- The Non-concessional cap – after tax contributions – had an increase from $100,000 to $110,000.
4. So what’s the difference between a concessional and non-concessional cap?
Contributions for the Concessional cap include:
- Compulsory contributions. The contributions your employer must make
- Salary sacrifice contributions. The extra contributions you can request your employer to make via your before-tax income
- Tax-deductible contributions. Using your after-tax money you can make voluntary contributions
Non-concessional contributions include personal after-tax contributions. These contributions are made with after-tax dollars which you don’t get a tax break for.
5. Transfer balance cap Changes
On 1 July 2017 the transfer balance cap was introduced with a lifetime limit on the amount of super that you can transfer into income streams for your retirement phase, including most pensions and annuities.
As of 1 July 2021, the transfer balance gap has now been changed to $1.7 million, up from $1.6 million.
6. Charge for excess contribution
You used to have to pay a charge if you exceeded your contribution cap. From 1 July 2021, you won’t have to pay that charge. But you’ll still need to pay extra tax.
7. COVID early release of super re-contribution
The superannuation system changed in 2019-20 and 2020-21 to allow you to make a re-contribution of the portion of your super you received under the previous super system. This allows you to re-contribute without that contribution counting towards your non-concessional cap.
So in summary…
It’s never too late to plan for your retirement and look into your super contributions. But the sooner, the better!