New rules and changing thresholds on 1 July 2021 Jul 1, 2021
A few new super rules and thresholds came into effect in the new financial year. We’ve summarised the major changes that could impact our members and clients.
The SG rate
The Super Guarantee (SG) rate increased from 9.5% to 10% on 1 July 2021. It’s then scheduled to increase by 0.5% each financial year until reaching 12% on 1 July 2025.
Find out more here.
Before- and after-tax caps
Both the before- and after-tax caps were increased on 1 July 2021 due to indexation determined by the ATO. The after-tax contribution cap has increased from $100,000 per year to $110,000 per year. The before-tax cap has increased from $25,000 to $27,500. This means members will be able to contribute more to their super account each financial year.
Minimum Pension drawdowns
Last year, the Government temporarily reduced the minimum annual payment amounts for superannuation pensions (such as Intrust Super’s Super Stream income account). These rates have been extended into the 2021/22 financial year, and will now be in place until 30 June 2022 (see Table 1). Find out more here.
Table 1 – Minimum annual pension income per age group, as a percentage of account balance
Government co-contribution income thresholds
The co-contribution income thresholds have increased as of 1 July 2021. Those who earn less than $41,112 may now be eligible to receive the maximum Government co-contribution of $500^. Those that earn up to $56,112 may also be eligible to receive a partial co-contribution^.
Find out more here.
Table 2 – Government co-contribution income thresholds
Transfer Balance Cap
The Transfer Balance Cap, which is the limit on the total amount of super that can be transferred into a retirement phase, is increasing from $1.6 million to $1.7 million. The Total Superannuation Balance limit is also increasing from $1.6 million to $1.7 million. These increases will also have an impact on the bring-forward rule for those who are nearing the limits.
Please note that the rules around the Transfer Balance Cap are quite complex. If you would like to know more about how this increase will impact you, talk to the advisers at Intrust360°.
Your Future, Your Super
Please note, the new ‘Your Future, Your Super’ rules, due to be in place on 1 July 2021, have been delayed.
Under these rules, from 1 November 2021, super fund accounts will be ‘stapled’ to individuals. Businesses will need to find the details of the current super fund for each new staff member and pay their contributions into their current fund. A new Australian Tax Office (ATO) portal will be available to find staff member super funds.
Read more here.
If you’d like some assistance in adjusting your financial strategy in line with these new rules, the team at Intrust360° would be happy to help! Get in touch via phone on 1300 001 360, or by booking an appointment online.