On 1 July 2021, the Superannuation Guarantee (SG) rate will rise
from 9.5% to 10% - the first rise since 2014. It will then steadily
increase each year until it reaches 12% on 1 July 2025.
The 0.5% increase does not mean that everyone gets an automatic
pay increase. This will depend on your employment agreement. For
example, if your employment agreement states you are paid on a
‘total remuneration’ basis (base plus SG and any other allowances),
then your take home pay might be reduced by 0.5%. That is, a
greater percentage of your total remuneration will be directed to
your superannuation fund.
For those paid a rate plus superannuation, your take-home pay
will remain the same, but your superannuation fund will benefit
from the increase. If you are used to annual increases, the 0.5%
increase might simply be absorbed into your remuneration
review.
Employers will need to ensure that they pay the correct SG
amount in the new financial year to avoid the superannuation
guarantee charge. Where employee salaries are paid at a point other
than the first day of the month, ensure the calculations are
correct across the month (i.e., for staff paid on the
15th of the month, they are paid the correct SG rate for
June and July in their pay and not just the June rate).
Superannuation salary packaging arrangements will also need to
be reviewed - employers should ensure that the calculations are
correct and the SG rate increase flows through.
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|
SG rate
|
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1 July 2020 – 30 June 2021
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9.5%
|
|
1 July 2021 – 30 June 2022
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10%
|
|
1 July 2022 – 30 June 2023
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10.5%
|
|
1 July 2023 – 30 June 2024
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11%
|
|
1 July 2024 – 30 June 2025
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11.5%
|
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1 July 2025 – 30 June 2026
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12%
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From 1 July 2021, the superannuation contribution caps will
increase, enabling you to contribute more to your superannuation
fund (assuming you have not already reached your transfer balance
cap).
The concessional contribution cap will increase from $25,000 to
$27,500. Concessional contributions are contributions made into
your super fund before tax, such as superannuation guarantee or
salary packaging.
The non-concessional cap will increase from $100,000 to
$110,000. Non-concessional contributions are after-tax
contributions made into your super fund.
The bring-forward rule enables those under the age of 65 to
contribute three years’ worth of non-concessional contributions to
your super in one year. From 1 July 2021, you will be able to
contribute up to $330,000 in one year. Total superannuation balance
rules will continue to apply. However, if you have utilised the
bring-forward rule in 2018-19 or 2019-20, your contribution cap
will not increase until the three year period has passed.
Total super balance – contribution and bring forward
available
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1 July 2017 – 30 June 2021
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After 1 July 2021
|
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Total Superannuation Balance (TSB)
|
Contribution and bring forward available
|
Total Superannuation Balance (TSB)
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Contribution and bring forward available
|
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Less than $1.4m
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$300,000
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Less than $1.48m
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$330,000
|
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$1.4m -$1.5m
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$200,000
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$1.4m - $1.59m
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$220,000
|
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$1.5m - $1.6m
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$100,000
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$1.59m - $1.7m
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$110,000
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Above $1.6m
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Nil
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Above $1.7m
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Nil
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Indexation ensures that the caps on superannuation that limit
how much you can transfer into super and how much you hold in a
tax-free retirement account, remain relevant by making
pre-determined increases in line with inflation. To trigger
indexation, the consumer price index (CPI) needed to reach 116.9.
Australia reached 117.2 in December 2020, triggering increases to
the contribution and transfer balance caps from 1 July 2021. The
next increase will occur when a December quarter CPI reaches
123.75
The transfer balance cap (TBC), as the name suggests, limits how
much money you can transfer into a tax-free retirement account.
From 1 July 2021, the general TBC will increase from $1.6m to
$1.7m, but not everyone will benefit.
From 1 July 2021, there will not be a single cap that applies to
everyone. Instead, every individual will have their own personal
TBC of between $1.6 and $1.7 million, depending on their
circumstances.
If your superannuation is in accumulation phase before 1 July
2021, that is, you have not started taking an income stream
(pension), then your cap will be the fully indexed amount of
$1.7m
However, if you have started taking an income stream - you have
retired or are transitioning to retirement - then your indexed TBC
will be calculated proportionately based on the highest ever
balance of your account between 1 July 2017 and 30 June 2021.
Therefore, the closer your account is to the $1.6m cap, the less
impact indexation will have.
For anyone who reached the $1.6m cap at any time between 1 July
2017 and 30 June 2021, indexation will not apply and your cap will
continue to be $1.6m. So, for example, if you are transitioning to
retirement and drawing a pension, and your highest ever balance in
your retirement account was $1.2m, then indexation only applies to
$400,000 (the $1.6m cap less your highest very balance). In this
case, your new personal TBC will be $1,625,000 after
indexation.
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My super is…
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TBC to 30 June 2021
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TBC from 1 July 2021
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In accumulation phase
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$1.6m
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$1.7m
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In the retirement phase and I reached the $1.6m cap limit
between 1 July 2017 and 30 June 2021
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$1.6m
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$1.6m
|
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In the retirement phase and I have never reached the $1.6m cap
limit at any time between 1 July 2017 and 30 June 2021
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$1.6m
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$1.6m plus indexation on the amount between your highest ever
balance and the $1.6m cap.
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The Australian Taxation Office (ATO) will calculate your
personal TBC based on the information lodged with them (this will
be available from your myGov account linked to the ATO). If your
superannuation is in the retirement phase, it will be crucial to
ensure that your Transfer Balance Account compliance obligations
are up to date. For Self-Managed Superannuation Funds (SMSFs), it
is essential that you let us know about any changes that impact on
your transfer balance account, for example if a member of your fund
retires.
The total super balance caps to utilise the
spouse contribution offset and the government co-contribution
will also be lifted to $1.7m in line with indexation.
The Government has announced an extension of the temporary
reduction in superannuation minimum drawdown rates for a further
year until 30 June 2022.
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Age
|
Default minimum drawdown rates
|
2019-20, 2020-21 &
2021-22 reduced rates
|
|
Under 65
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4%
|
2%
|
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65-74
|
5%
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2.5%
|
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75-79
|
6%
|
3%
|
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80-84
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7%
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3.5%
|
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85-89
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9%
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4.5%
|
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90-94
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11%
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5.5%
|
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95 or more
|
14%
|
7%
|
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