Increase to Super Guarantee (SG) Contributions from 9.5% to 10%

Compulsory employer SG payments are scheduled to increase from 9.5% to 10% on 1 July 2021. When the compulsory SG contribution level is increased to 10%, you’ll need to adjust your payroll systems to pay the increased amount to your eligible employees.  If you don’t pay the correct rate of SG into your employees’ super accounts by the quarterly due date, you may have to pay the Superannuation Guarantee Charge (SGC). This ATO penalty for late or inaccurate payment includes all the SG amounts owing to an employee, plus interest and an administration fee. You will also need to report and rectify any missed payments by lodging an SG Statement with the ATO.

Feel free to visit the ATO’s super guarantee contributions calculator tool for assistance.

Contribution Caps Increasing

Contribution caps are set to increase for the first time since 2017.

* Assumes under age 65 at some time during year contribution made and that total superannuation balance was less than $1.48m at 30 June 2021.

It’s also worth noting that anyone who triggered their bring-forward period in either the 2019/20 financial year or the 2020/21 financial year can’t take advantage of the higher non-concessional cap until their current bring-forward period expires.

The transfer balance cap is also increasing with indexation, taking it to $1.7 million. This means an individual can not make any non-concessional contributions if their total superannuation balance is $1.7 million or more at 30 June 2021. Individuals who had a personal transfer balance account before 1 July 2021 will have a personal transfer balance cap calculated proportionally based on the highest balance of their transfer balance account. Their personal transfer balance cap will not be increased if, at any time before 1 July 2021, the balance of their transfer balance account met or exceeded $1.6 million.

Temporary reduced minimum superannuation pension payments continuing

The government recently announced that the temporary reduction in minimum annual rates for income streams has been extended for another financial year to 30 June 2022. This means that if you elected to be paid the minimum annual payment it will be based on the below reduced rates.

If you need any assistance or have further questions, please contact your Kennas Accountant or Financial Planner.