From 1 July 2021, there are a number of key changes to superannuation. If for whatever reason you did not read the ATO Roadmap, fear not, for the changes presented are much less bewildering then the government guidance on the matter, with most of the adjustments being index changes to existing rates.
Employer Compulsory Contributions
First and foremost, the scheduled increase of compulsory superannuation contribution will rise to 10%, and will rise by 0.5% each year until it reaches 12% on the 1st July 2025. All major software and accounting tools will likely recognize this change, and likely broadcast a notice towards the end of financial year, however, be aware of the increasing costs. The increase in costs will need to be taken into account when reviewing business budgets for the year ahead. In some instances (depending on overall payroll costs) this can represent a significant additional cost to business if not prepared for.
Furthermore, the government has announced that it will be indexing Contribution Caps to allow further contributions to be made into your Fund from 1 July 2021. The below tab summarises the increase in contribution caps that will apply.
|Cap||Current Cap||Cap from 1 July 2021|
|Concessional Contributions Cap||$25,000||$27,500|
|Non-Concessional Contributions Cap||$100,000||$110,000|
The changes presented enable changes to the bring forward rule, which alter the existing three year carry forward of non-concessional superannuation. As per the table above, 330,000 dollars total can be brought forward if your total super balance is under 1.48m, with diminishing returns to 0 bring forward value if your superannuation total balance is greater then 1.7m.
The changes predominately impact retirement planning, superannuation investment, and Self-Managed Super Fund structure, and MJJ recommends this planning be done before the changes land and alter contribution amounts in order to ensure the correct strategy is implemented.
If you have further questions in relation to the superannuation changes, please contact us by phone on 07 5451 1118 or email us.