Superannuation may feel like it is forever changing, however it is important to keep up to date.
Per the Government’s legislated guarantee, as we move into a new financial year, superannuation contributions will increased from 9.5% to 10.0%. This signals the beginning of annual incremental increases in superannuation to 12.0% by FY2026.
As well as this, the Government has both implemented and proposed changes to various eligibility requirements, caps, and tests to increase equity in the superannuation scheme.
Most importantly, businesses will need to adjust their payroll to pay the increased superannuation contribution to eligible employees. This will have the effect of increasing business’ superannuation expense, work cover premiums, and payroll tax liability. In some cases, the increase in the superannuation expense may result in some businesses becoming liable for payroll tax for the first time.
If superannuation is not paid by the business at the quarterly date, the business may be required to pay a superannuation guarantee charge (SGC). This is an ATO penalty for late or inaccurate payments.
The new financial year also signals changes to default superannuation processes – from 1 November 2021, a system of ‘stapling’ will apply to employees. This means that employees will retain their existing superfund when they commence employment with a business, unless they appoint a superfund themselves. Employees will still easily be able to move across funds at their convenience.
Finally, in an effort to streamline reporting and processing by the ATO, all businesses will be required to use single touch payroll from 1 July 2021.
The beginning of the financial year has seen the introduction of new innovation.
MyGov’s ‘YourSuper’ comparison tool launched on 1 July 2021, facilitating the comparison of information about fees and returns.
Furthermore, caps for superannuation contributions have increased for the first time since July 2017. For concessional contributions, caps have increased from $25 000 to $27 500, and for non-concessional contributions, caps have increased from $100 000 to $110 000.
|
Prior to 1 July 2021 |
1 July 2021 onwards |
|
|
Concessional contributions |
25 000 |
27 500 |
|
Non-concessional contributions |
100 000 |
110 000 |
Other proposed changes include removing the $450/month threshold. Under this legislation, the test for eligibility for superannuation has been widened. The availability of superannuation to casual and part-time workers will mean that 300 000 more Australians receive superannuation, 63% of whom are women.
Some of the other proposed changes to come into effect next year include:
Repealing the work test;
Reducing eligibility for downsizer contributions; and
Increasing the First Home Super Saver Scheme.
To ensure you are on top of your superannuation, we recommend that you check in with your fund, payroll, and tax obligations.
Lastly, as these contributions become more material, the opportunity exists for individuals to be become more proactive about the management of superannuation, and how it fits in more broadly to financial goals and objectives.
More information?
E: enquiry@mcpgroup.com.au
P: (03) 9620 2001
W: www.mcpfinancial.com.au