Superannuation Rate Changes July 1 2021

LAST UPDATED 22 June 2021

Superannuation Guarantee

From 1 July 2021 the rate of Superannuation Guarantee is to increase from 9.5% to 10%.

The Superannuation Guarantee Rate is expected to continue to increase by 0.5% each year until it reaches 12.0%:-

Financial Year	Rate
1 July 2020 to 30 June 2021	9.5%
1 July 2021 to 30 June 2022	10.0%
1 July 2022 to 30 June 2023	10.5%
1 July 2023 to 30 June 2024	11.0%
1 July 2024 to 30 June 2025	11.5%
1 July 2025 +	12.0%

Superannuation Guarantee is payable on Ordinary Times Earnings for both employees and individual Contractors (where they are paid mainly for their Labour).

How the increase in Superannuation is to be processed is largely dependant on the Employment Contract with each employee.

Where the ‘employee’ is on a salary package that is plus Superannuation, then the employer is required to pay the Superannuation on top of this existing wages.
Where the ‘employee’ is on a salary package that is inclusive of Superannuation, then the employer is entitled to pay the Superannuation from their existing salary package (although this does not prevent them from passing on the increase).

Superannuation Contribution Caps

From 1 July 2021 the Superannuation Contribution Caps are to increase as a result of Indexation:

	2021 FY	2022 FY+
Concessional Contributions	$25,000	$27,500
Non-Concessional Contributions	$100,000	$110,000

Provided a member is under the age of 67, a Superannuation Fund can accept Superannuation Contributions (employer and member) on behalf of a member without restriction.

Where a member is aged between 67 and 74, they are required to satisfy the Work Test (‘Gainfully Employed’ for at least 40 hours in a period of not more than 30 consecutive days in the Financial Year) in order for a Superannuation Fun to accept Superannuation Contributions on behalf of a member. If the Work Test is not satisfied only Mandated Employer Contributions (Super Guarantee only not Salary Sacrifice) are allowed.

Where a member is aged 75 or over, Superannuation Funds are only allowed to accept Mandated Employer Contributions.

A deduction is available to the entity making a Concessional Contribution (either the employer or the member), provided:

That the employer makes the payment by the due date (within 28 days of the end of the quarter in which the payment relates; and
That the member provides the Superannuation Fund the completed ‘Notice of intent to claim or vary a deduction for personal super contributions’ form on time.

Transfer Balance Cap

From 1 July 2021 the Transfer Balance Cap is to increase from $1.6 million to $1.7 million as a result of Indexation. The Transfer Balance Cap affects:

The amount that can be allocated to a Retirement Phase Pension in order to access the Tax Free Status of earnings on Member Balances; and
The extent to whether a member can make Non-concessional Contributions into a Superannuation Fund.

Working out the Transfer Balance Cap for allocation to Retirement Phase Pensions (after indexation):

Where the Transfer Balance Cap has not be used prior to 1 July 2021, the Transfer Balance Cap would be $1.7 million.
Where all of the $1.6 million Transfer Balance Cap has already been utilised (at any time prior to 1 July 2021), the Transfer Balance Cap will remain at $1.6 million (ie. the increase to $1.7 million will not allow a member to transfer an additional $0.1 million into a Retirement Phase Pension).
Where a portion of the $1.6 million Transfer Balance Cap has ben utilised prior to 1 July 2021, the increase to $1.7 million may allow for a proportionate increase in the Transfer Balance Cap based on the lowest unused balance of the Transfer Balance Cap at any time prior to 1 July 2021.

For example: if a member utilised $1.2 million of the Transfer Balance Cap (leaving $0.4 million of the Transfer Balance Cap unutilised) prior to 1 July 2021, then commuted $0.3 million of their Retirement Phase Pension prior to 1 July 2021 (leaving $0.7 million of the $1.6 million Transfer Balance Cap unutilised), the indexation of the Transfer Balance Cap to $1.7 million would result in a revised Transfer Balance Cap of $1.625 million ( [1.6M – 1.2M] ÷ 1.6M × 100k + 1.6M ).

Provided a member is under the age of 67 at any time during a financial year (legislation has recently been passed increasing the age limit from 65 to 67 from 1 July 2020) it is possible for the member to be able to utilise up to three (3) years of their Non-concessional Contribution Cap (under the bring-forward provisions) provided their member balance (across all funds) does not exceed certain thresholds.

	2021 FY		2022 FY+
3 Years	< $1.40 M	$300,000	< $1.48 M	$330,000
2 Years	$1.40 M to < $1.50 M	$200,000	$1.48M to < $1.59 M	$220,000
1 Year	$1.50 M to < $1.60 M	$100,000	$1.59 M to < $1.70 M	$110,000
N/A	≥ $1.60 M	$Nil	≥ $1.70 M	$Nil