As we all know, superannuation is a complex area of rules and legislation.
There are some important announcements from the Federal Government, set out below in point form:
REMOVING THE $450 THRESHOLD FOR SUPER GUARANTEE
- Employees currently have to earn a minimum of $450 per month, before the compulsory superannuation guarantee needs to be paid. From 1st July 2022, this threshold will be removed. Consequently, all employees will be entitled to receive the superannuation guarantee payment.
- The removal of the salary threshold, will mean an additional 10% wage cost, relating to employees that previously were not entitled to the payment.
- Businesses that employ casual and part-time employees will be particularly impacted.
- Please note again, that this change does not apply until 1 July, 2022.
WORK TEST FOR OVER 70
- From 1st July 2022, individuals aged 67 to 74 will no longer be required to meet the work test when making or receiving non-concessional superannuation contributions or salary sacrificed contributions.
- The work test is working at least 40 hours, in a period of 30 consecutive days during the financial year.
- This may result in some additional salary sacrifice agreements for employees in this age bracket who are still working part-time or casual.
SUPERANNUATION INCREASE FROM 9.5% TO 10%
- From the first pay period in July 2021, the superannuation guarantee percentage increases from 9.5% to 10%.
- No adjustment is made to the 10% rate, if part of that first July pay relates to days worked pre-June 30.
- It is important that employers check that the superannuation rate has been adjusted to 10% in their payroll software for the first pay period from 1 July 2021. In some cases, a manual adjustment may be required.
CONCESSIONAL CONTRIBUTIONS CAP
- The maximum concessional/deductible contribution cap is currently $25,000 and that remains for the 2020/21 year. However, for the year commencing 1 July 2021, the concessional limit has been increased to $27,500.