From the 1st of July, changes to superannuation will come into effect that will impact how you manage your super contributions for yourself and your employees. Here’s what you need to know.
Superannuation Guarantee Increase to 10%
Starting on 1 July 2021, employers will now have to contribute 10% of an employee’s income to their nominated super fund or retirement savings account. This is an increase of 0.5% over the current 9.5% contribution.
The employer Super Guarantee amount will increase by 0.5% each year until it reaches 12% in 2025.
Superannuation accounts will follow you between jobs
Under the current system, employees were able to choose to nominate a super fund for their employer or have their superannuation sent to the default fund of choice by their employer. This has led to a fragmentation of superannuation savings for many Australians.
Under the changes proposed by the government, superannuation will be consolidated by requiring employers to obtain existing super fund information of employees from the ATO or via the Standard Choice Form. Only after these two methods fail to provide super fund information, can an employer nominate a default fund.
Once legislated, these changes would come into effect from 1 July 2022.
Changes to voluntary super contributions
From 1 July 2021, the rates for super contributions are increasing.
The cap on Concessional (before-tax) contributions will increase from $25,000 to $27,500.
Non-concessional (after-tax) contributions can now be made up to $110,000 (up from $100,000)
General transfer balance cup has been increased from $1.6 to $1.7 million.
Removal of the $450/month minimum requirement for Super Guarantee
In a move to remove inequality in the superannuation system, the government has eliminated the minimum requirements for super guarantee. Low-income earners earning less than $450 a month will be able to claim their 10% superannuation guarantee.
These changes will come into effect from 1 July 2022.
First Home Super Saver Scheme (FHSSS)
From 1 July 2022, The maximum withdrawal from superannuation funds for home loans under the First Home Super Saver Scheme (FHSSS) will increase from $30,000 to $50,000. The FHSSS is best leveraged in conjunction with concessional super contributions via salary sacrificing. Only funds contributed to super funds via concessional or non-concessional means can be accessed under this scheme. Compulsory employer contributions cannot be accessed to fund home loans.
Removal of the work test for people aged 67 to 74
Employees aged 67 to 74 years will no longer have to work at least 40 hours within 30 days before making concessional or non-concessional super contributions.
This will come into effect from 1 July 2022.
Need advice on managing payroll and super contributions? POP can help
If you’re unsure about how to manage your employee’s payroll, and super contributions, don’t worry – POP can help. Get in touch with us and we can sort out all your payroll and bookkeeping needs. You’ll be able to spend more time focusing on your business!