Superannuation changes set to come into effect
A number of proposed changes to the superannuation legislation are likely to come into effect as at 1 July 2021 giving Australian’s the ability to put more money into their retirement funds.
As the life expectancy of the populations continues to increase, changes to the superannuation legislation were crucial to support our changing lifestyles.
Confirmed Change to Superannuation Guarantee
As of 1 July 2021, the super guarantee – the proportion of wages hat employers must contribute to an employees superannuation – will increase from 9.5% to 10%.
The rate of the superannuation guarantee will continue to increase by 0.5% each year, until it reaches 12% by 2025.
The proposed changes include:
Please note all below changes are proposed.
Monthly Income Threshold
The superannuation legislation changes will also see benefits for casual and part-time workers earning less than $450 per month from the one employer. Currently these workers are not entitled to receive compulsory superannuation from their employers. This is set to change on 1 July 2021.
The legislation changes will mean regardless of how much money you earn, you will be entitled to employer paid superannuation.
The change is set to impact around 3% of Australian’s workers and will work towards providing equity for all workers.
First Home Super Saver Scheme
A higher withdrawal limit on the First Home Super Saver Scheme is set to be introduced, increasing the maximum withdrawal from $30,000 to $50,000. The scheme allows people to make voluntary superannuation contributions to help save for their first home.
The scheme relates only to the voluntary contributions made, first home buyers cannot withdraw any part of their compulsory superannuation savings.
Abolishing the work test
Currently the work test requires those aged between 67 and 74 years to be employed for at least 40 hours over a 30 day consecutive period (during a financial year) before any super contributions can be accepted. Under the proposed changes coming into effect at 1 July 2021, the work test will be abolished.
It is important to note that the test will continue to apply where an application to make personal deductions is made.
Super changes to impact retirees
The legislation changes will see the eligibility for downsizer contributions lowered from 65 to 60 years. The downsizer contributions allows retirees to contribute up to $300,000 to their super following the sale of their home. Couples may be eligible to contribute up to $300,000 each.
Note proceeds from the sale of the home that are transferred into super, will be included in the asset test for the Age Pension.
If you have any questions on the proposed superannuation legislation changes coming into effect as at 1 July 2021, please contact our office and one of our Accountants or Advisors would be happy to assist you.
Phone our office on (03) 5445 4777 or contact us via our website.