Super guarantee rate increase to 10%
On 1
July 2021, the Superannuation Guarantee (SG) rate will rise from 9.5% to 10% - the first rise since 2014. It will then steadily increase
each year until it reaches 12% on 1 July 2025.
Annual Super Guarantee Rate Changes
| SG Rate | |
| 1 July 2020 - 30 June 2021 | 9.5% |
| 1 July 2021 - 30 June 2022 | 10% |
| 1 July 2022 - 30 June 2023 | 10.5% |
| 1 July 2023 - 30 June 2024 | 11% |
| 1 July 2024 - 30 June 2025 | 11.5% |
| 1 July 2025 - 30 June 2026 | 12% |
|
|
Super guarantee rate increase to 10% |
|
|
Indexation increases contribution caps and the transfer balance cap |
|
|
Concessional and non-concessional contribution caps |
|
|
Transfer balance cap – why you will have a personal cap |
|
|
Minimum superannuation drawdown rates |
|
|
Single touch payroll reporting |
New stapled superannuation employer obligations for new
staff
Currently, when an employer hires a new staff member, the employee is provided with a Choice of Fund form to identify where they want their
superannuation to be directed. If the employee does not identify a fund, the employer directs their superannuation into a default fund.
When someone has multiple funds, it often erodes their balance through unnecessary fees and often insurance. And, as at 30 June 2020, there was $13.8 billion of lost and unclaimed superannuation in accounts across Australia.
Indexation increases contribution caps and the transfer balance cap
Indexation ensures that the caps on superannuation that limit how much you can transfer into super and how
much you hold in a tax-free retirement account, remain relevant by making pre-determined increases in line with inflation. To trigger
indexation, the consumer price index (CPI) needed to reach 116.9. Australia reached 117.2 in December 2020 triggering increases to the
contribution and transfer balance caps from 1 July 2021. The next increase will occur when a December quarter CPI reaches 123.75.
Concessional and non-concessional contribution caps
From 1 July 2021, the superannuation contribution caps will increase enabling you to contribute more to your
superannuation fund (assuming you have not already reached your transfer balance cap).
The concessional contribution cap will increase from $25,000 to $27,500. Concessional contributions are contributions made into your super
fund before tax such as superannuation guarantee or salary packaging.
Transfer balance cap – why you will have a personal cap
The transfer balance cap (TBC), as the name suggests, limits how much money you can transfer into a tax-free
retirement account. From 1 July 2021, the general TBC will increase from $1.6m to $1.7m but not everyone will benefit from the increase.
From 1 July 2021, there will not be a single cap that applies to everyone. Instead, every individual will have their own personal TBC of
between $1.6 and $1.7 million, depending on their circumstances.
Minimum superannuation drawdown rates
The Government has announced an extension of the temporary reduction in superannuation minimum drawdown rates for a further year until 30 June 2022.
| Age | Default minimum drawdown rates | 2019-20, 2020-21 & 2021-22 reduced rates |
| Under 65 | 4% | 2% |
| 65 - 74 | 5% | 2.5% |
| 75 - 79 | 6% | 3% |
| 80 - 84 | 7% | 3.5% |
| 85 - 89 | 9% | 4.5% |
| 90 - 94 | 11% | 5.5% |
| 95 or more | 14% | 7% |
Single touch payroll reporting
Single touch payroll will apply to most businesses from 1 July 2021, this will include small businesses (those with 19 or fewer staff) and businesses with closely held employees (e.g., directors of family companies, salary and wages for family employees of businesses). No further extensions will be granted.
Falling behind on your BAS lodgements looks like an administrative problem. Left long enough, it becomes an expensive one, because the GST you collected stays payable indefinitely while the GST credits you are owed disappear after four years. Here is what that looks like in dollars.
With negative gearing now quarantined for established dwellings, new house and land has become the sensible play for investors — but there is a trap in the first eighteen months. Interest on the land is denied, while interest on the construction is not. If the bank has written one loan, someone has to do the sums. Here is why it pays to split the loan before you sign.
When the draft legislation for the trust minimum tax was released, it came with a reassurance: if you do not want to restructure, you can simply make an election instead — no restructure, and no state stamp duty. That is accurate, but it is also a very small part of the decision. Here is why you should choose your structure for the eventual sale of your business, not for the announcement.
