1 July 2021 Will See Super Guarantee Rate Rise
Super | 06 21st, 2021|

Many years ago Julia Gillard’s government announced increases in the Superannuation Guarantee rate from 9% at the time, up to 12%. The impact of the Global Financial Crisis has led subsequent governments to continually postpone these increases. So far, Australia has only received two increases, back in 2013 and 2014, when the superannuation rate went up to 9.5% over two years. It has remained at 9.5% since 2014.

Now it is time for the next increase. This will happen on 1 July 2021 when the rate of superannuation that you have to pay for most of your employees will be 10% of their salary or wage instead of the current 9.5%.

For most employers that are using payroll software, this change will happen automatically. You should however confirm with your software provider (either directly or through someone like us) that this will happen to ensure that you remain compliant without needing further action.

For most employees, this will mean an extra 0.5% added to their current salary plus super. But where an employee is on a contract where their salary is superannuation inclusive it could be that they will receive a corresponding reduction in their salary to offset the extra superannuation. Employers and employees will need to have a discussion about this so that everyone knows the situation they will be in for the new financial year.

The proposed increase to 12% is still scheduled to happen in 0.5% increments each financial year until the 2025-26 year when the Superannuation Guarantee rate will peak at 12%. The rates applicable to each financial year are proposed to be:

1 July 2021 to 30 June 2022 10%

1 July 2022 to 30 June 2023 10.5%

1 July 2023 to 30 June 2024 11%

1 July 2024 to 30 June 2025 11.5%

1 July 2025 onwards 12%

It is also possible that the government will delay the increases as it has done in the past, but you will be kept informed regarding that information.

High School Students, It’s Time To Get Creative About Tax & Super
Super | 06 16th, 2021|

The ATO’s Tax, Super + You competition is a fun and engaging way for Australian high school students to learn about tax and super, unleash their creativity and potentially win some great prizes.

Working as a part of a team or individually, students are invited to write, make or film an entry for their topic:

* Junior (Year 7–9) are asked to highlight the value of tax or super (or both) in the community

* Senior (Year 10–12) must discuss your first job and what you need to know about tax and super.

Shortlisted entries in 2019 included raps, songs, animations, video skits and even a board game. If you’re a high school student interested in competing this year or are the parent of one, this resource is a great way to see how people have gotten involved previously (and that you can draw inspiration from as well).

The competition opened on 24 May, but entries will be accepted until 13 August. The winners will be decided by a judging panel, including guest judge Effie Zahos who is one of Australia’s leading personal finance commentators. The public can also vote for their favourite entry in the People’s Choice Awards.

Tax Office Assistant Commissioner Sally Bektas said she was thrilled to be back on the judging panel.

“Our Tax, Super + You competition has really shown that building financial literacy can be fun and bring out the best in students. I’m so excited to see the entries for 2021,” Sally said.

You can watch Sally explain how to get involved on ATOtv.

Winners of the 2021 Tax, Super + You competition will be announced in September.

Looking for more information about the 2021 Tax, Super + You competition? Visit www.taxsuperandyou.gov.au/competition to find out more details.

Getting a Double Deduction for your Super Contributions?
Super | 06 7th, 2021|

Each year we are entitled to a tax deduction for a certain amount of superannuation contributions. The tax deduction is available to your employer if they contribute on your behalf but it can also be available to you personally when you make extra contributions to super.

The amount that you can claim as a tax deduction is limited to what is known as your Concessional Contributions Cap. There is a standard Cap of $25,000, though that is increasing to $27,500 on 1st July 2021. There are certain people that can add amounts that haven’t been used in previous years to this cap amount.

If you go over your Concessional Contributions Cap, the excess contributions are merely added to your taxable income so you don’t get any tax benefits out of the contribution.

For example, let’s say your Concessional Contributions Cap is $25,000 but you make $35,000 in concessional contributions. The extra $10,000 will be added to your taxable income but you will receive a credit for the $1,500 in contributions tax paid by the super fund.

But there is a little known trick to allow you to “bring forward” a tax deduction for your concessional contributions. This “hack” is commonly known as a Contributions Reserving Strategy and it has been approved by the Tax Office. If done correctly it allows you to take some of next year’s Concessional Contributions Cap and bring it into this financial year. But it must be done correctly and if you take advantage of it, you need to lodge a specific form with the Tax Office to let them know. The ATO will almost certainly audit what you have done.

It is also important to note that it is really only achievable to do this strategy with a Self Managed Superannuation Fund. It is also important to note that you are merely bringing forward your contribution (using it this year) and that you won’t be able to use that amount next year, so careful planning is also needed.

This type of strategy is used by people who will have an unusually higher taxable income this year than they will next year. So, for example, you might have a large capital gain this year or you might be retiring and have no taxable income next year.

Leaving it until the new year to discuss this strategy is way too late and it absolutely cannot be done after late June so it is essential that you talk to us if you feel next year’s taxable income will be a lot lower than this year.

Downsizer Contributions – What Are They?
Super | 06 3rd, 2021|

If you are aged 65 years or older, you are currently able to make downsizer contributions of up to $300,000 into your superannuation fund from the sale of your main residence (as of 1 July 2018).
The Federal Budget recently announced that the age limit for downsizer contribution payments will be reduced from 65 to 60 once the relevant legislation has been passed.

This means that you can increase your super fund’s balance without impacting on your contribution caps (as it is not a non-concessional contribution), and this contribution can still be made even if your superannuation balance exceeds $1.6 million. It does however count towards your transfer balance cap, which is currently set at $1.6 million (increasing to $1.7 million for most people on 1 July 2021).

The downsizer contributions scheme can only be accessed once, so it can only apply when you sell or dispose of one home, including selling a part interest in a home. It is a one-time deal essentially and is not a tax-deductible amount.

You can however make multiple downsizer contributions from the proceeds of a single sale, but the total of the contributions cannot exceed $300,000 less than any other downsizer contributions that you have made.

You and your spouse can (in certain circumstances) both make downsizer contributions from the sale of the home even if the house was only owned by one of you, provided you both meet all the requirements.

These contributions will also come into account for determining whether or not you are eligible to receive the age pension.

If you would like more information on how to proceed with downsizer contributions, are looking to sell your home and wanting to continue with downsizer contributions from the sale, or just looking for guidance, we can help. Come speak with us.

Removing Superannuation’s Minimum Income Threshold Limit
Super | 05 26th, 2021|

From 1 July 2022 employees will no longer need to meet the monthly minimum income threshold of $450 to receive superannuation guarantee payments from their employers due to the Federal Budget’s recently announced changes to superannuation.

Previously, employers did not need to pay employees superannuation guarantee payments if they did not earn $450 per month. Employees who worked for multiple employers but did not earn the same amount from a single employer were not eligible for superannuation guarantee payments.

Close to $125 million of contributions was not being made due to employees not satisfying the minimum income threshold of $450. An estimated 300,000 Australians were reported to have been missing out on those contributions each year.

For employees who worked in lower-income jobs or in part-time or casual employment that may not reach that minimum income threshold, this meant that they were missing out on critical payments to their super. With women making up a more significant proportion of these workers, it also caused the gender gap in superannuation already present to widen further.

The removal of the minimum income threshold means now that these employees will be able to accrue super through the payments made by their employer and help address a long-term equity issue that had been in place in superannuation for years.

These changes should come into effect by July 2022 and, though they may not necessarily improve the retirement outcomes of individuals, the savings resulting from these payments into super will be boosted and all workers will as a result be provided with superannuation coverage, regardless of whether or not they earn more than $450.

Supposing that you are an employer who will now have to pay superannuation guarantee payments to your employees and did not have to do so before. In that case, you can speak with us to ensure that you are meeting your compliance requirements with super for your employees.

Removing Superannuation’s Minimum Income Threshold Limit
Super | 05 26th, 2021|

From 1 July 2022 employees will no longer need to meet the monthly minimum income threshold of $450 to receive superannuation guarantee payments from their employers due to the Federal Budget’s recently announced changes to superannuation.

Previously, employers did not need to pay employees superannuation guarantee payments if they did not earn $450 per month. Employees who worked for multiple employers but did not earn the same amount from a single employer were not eligible for superannuation guarantee payments.

Close to $125 million of contributions was not being made due to employees not satisfying the minimum income threshold of $450. An estimated 300,000 Australians were reported to have been missing out on those contributions each year.

For employees who worked in lower-income jobs or in part-time or casual employment that may not reach that minimum income threshold, this meant that they were missing out on critical payments to their super. With women making up a more significant proportion of these workers, it also caused the gender gap in superannuation already present to widen further.

The removal of the minimum income threshold means now that these employees will be able to accrue super through the payments made by their employer and help address a long-term equity issue that had been in place in superannuation for years.

These changes should come into effect by July 2022 and, though they may not necessarily improve the retirement outcomes of individuals, the savings resulting from these payments into super will be boosted and all workers will as a result be provided with superannuation coverage, regardless of whether or not they earn more than $450.

Supposing that you are an employer who will now have to pay superannuation guarantee payments to your employees and did not have to do so before. In that case, you can speak with us to ensure that you are meeting your compliance requirements with super for your employees.

What Does The Non-Concessional Cap Increase Mean For You?
Super | 05 18th, 2021|

The Federal Budget dropped on Tuesday, 11 May, with many announced amendments and changes that affected the superannuation and SMSF sectors. Non-concessional contributions increased maximum limits were announced and would come into effect as of 1 July 2021, increasing the cap from $110,000, up from the previous cap of $100,000.

Personal Contributions made into an SMSF from after-tax income on which no tax deduction is claimed, known as Non-Concessional Contributions. Non Concessional Contributions are personal contributions made into your SMSF from your own personal Bank Account and not contributions to your super made by your Employer.

You will be able to put non-concessional contributions into super (including using the bring-forward rule) up until age 74, without there being a need for you to work.

The bring-forward rule is a provision that allows Members of a superannuation fund to make non-concessional contributions that amounted to more than the contributions cap of $100,000 in one year by utilising the cap for the next two years. It has been amended to reflect the Budget’s rulings and come into effect on 1 July 2021.

You will still need to meet the work test if you wish to make tax-deductible contributions. Still, this outcome may provide some excellent planning opportunities for you regarding removing taxes from the death benefits that your adult children will pay on any benefits paid out to them from your superannuation.

As an example, with the increase to the age limits, there are many ways that you can take advantage of this to boost your super. Let’s say that you have extra cash that you would like put into the superannuation system that you weren’t previously able to, such as $100,000 that you wanted to put in when you turned 67 but were unable to because the age limit for non-concessional contributions had been reached.

With the increase, you will be able to put non-concessional contributions into your super up until you reach 74, which could amount to a hefty sum if you contribute the maximum cap limit amount each year.

We can offer you advice on how best to utilise this new non-concessional contributions cap to your advantage and our knowledge of strategies that we can use for non-concessional contributions to potentially save your children tens of thousands of dollars in death benefits taxes (currently taxed at 15%) if you wish to leave any of your super to your adult children.

Speak with us to find out more about the other ways that you can benefit from the newly released Federal Budget’s outcomes and announcements involving superannuation.

What Does The Non-Concessional Cap Increase Mean For You?
Super | 05 18th, 2021|

The Federal Budget dropped on Tuesday, 11 May, with many announced amendments and changes that affected the superannuation and SMSF sectors. Non-concessional contributions increased maximum limits were announced and would come into effect as of 1 July 2021, increasing the cap from $110,000, up from the previous cap of $100,000.

Personal Contributions made into an SMSF from after-tax income on which no tax deduction is claimed, known as Non-Concessional Contributions. Non Concessional Contributions are personal contributions made into your SMSF from your own personal Bank Account and not contributions to your super made by your Employer.

You will be able to put non-concessional contributions into super (including using the bring-forward rule) up until age 74, without there being a need for you to work.

The bring-forward rule is a provision that allows Members of a superannuation fund to make non-concessional contributions that amounted to more than the contributions cap of $100,000 in one year by utilising the cap for the next two years. It has been amended to reflect the Budget’s rulings and come into effect on 1 July 2021.

You will still need to meet the work test if you wish to make tax-deductible contributions. Still, this outcome may provide some excellent planning opportunities for you regarding removing taxes from the death benefits that your adult children will pay on any benefits paid out to them from your superannuation.

As an example, with the increase to the age limits, there are many ways that you can take advantage of this to boost your super. Let’s say that you have extra cash that you would like put into the superannuation system that you weren’t previously able to, such as $100,000 that you wanted to put in when you turned 67 but were unable to because the age limit for non-concessional contributions had been reached.

With the increase, you will be able to put non-concessional contributions into your super up until you reach 74, which could amount to a hefty sum if you contribute the maximum cap limit amount each year.

We can offer you advice on how best to utilise this new non-concessional contributions cap to your advantage and our knowledge of strategies that we can use for non-concessional contributions to potentially save your children tens of thousands of dollars in death benefits taxes (currently taxed at 15%) if you wish to leave any of your super to your adult children.

Speak with us to find out more about the other ways that you can benefit from the newly released Federal Budget’s outcomes and announcements involving superannuation.

Gender Inequality in Superannuation
Super | 05 13th, 2021|

Gender gaps can affect superannuation accounts as much as they can affect salary rates. With barriers to entering into fields, lower hourly rates of pay, less hours worked and more unpaid labour affecting the amount of super Australian women are retiring with, as compared to men.

Currently, the median superannuation balance for men aged between 60-64 stands at $204,107 whereas the superannuation balance for women of the same age has a median total of $146,900. It’s a gender superannuation gap of 28%.

This gender gap in superannuation balances can be impacted even more by women using maternity leave. With women taking their time off from work and losing out on super contributions during this period of paid parental leave, it can affect their super in the long run as it exacerbates the income and superannuation gaps that were already in effect during their employment.

It can also be exacerbated by existing salary gaps across the workforce. Despite traditionally male-dominated fields experiencing high percentages of female graduates entering into the workforce, the positions that they fill are not always high-ranked, irrespective of experience.

There are threeproposed measures with regard to how the superannuation gap could be addressed at a macro level. These include:

  • Including superannuation guarantee contributions in the Commonwealth Paid Parental Leave scheme, as a majority of recipients are women and it is a leading cause of the gap exacerbation.
  • allowing unused concessional contributions to be made for recipients of Commonwealth Paid Parental Leave without time limits is having a negative impact on women’s superannuation outcomes, so the policy needs to be changed accordingly.
  • Amending the Sex Discrimination Act to ensure employers are able to make higher superannuation payments for their female employees if they wish to do so without contravening the existing legislation.

Here are some examples of ways in which women can increase their super balances to make up for any losses that may have been incurred:

  • Contribution splitting – by having their spouse transfer some of their superannuation contributions over to their account, their account can be increased.
  • Salary-sacrificing contributions into their super to make up for the shortfall from not working in previous year.

If you are concerned about your superannuation, or would like further advice, please speak with us.

Gender Inequality in Superannuation
Super | 05 13th, 2021|

Gender gaps can affect superannuation accounts as much as they can affect salary rates. With barriers to entering into fields, lower hourly rates of pay, less hours worked and more unpaid labour affecting the amount of super Australian women are retiring with, as compared to men.

Currently, the median superannuation balance for men aged between 60-64 stands at $204,107 whereas the superannuation balance for women of the same age has a median total of $146,900. It’s a gender superannuation gap of 28%.

This gender gap in superannuation balances can be impacted even more by women using maternity leave. With women taking their time off from work and losing out on super contributions during this period of paid parental leave, it can affect their super in the long run as it exacerbates the income and superannuation gaps that were already in effect during their employment.

It can also be exacerbated by existing salary gaps across the workforce. Despite traditionally male-dominated fields experiencing high percentages of female graduates entering into the workforce, the positions that they fill are not always high-ranked, irrespective of experience.

There are threeproposed measures with regard to how the superannuation gap could be addressed at a macro level. These include:

  • Including superannuation guarantee contributions in the Commonwealth Paid Parental Leave scheme, as a majority of recipients are women and it is a leading cause of the gap exacerbation.
  • allowing unused concessional contributions to be made for recipients of Commonwealth Paid Parental Leave without time limits is having a negative impact on women’s superannuation outcomes, so the policy needs to be changed accordingly.
  • Amending the Sex Discrimination Act to ensure employers are able to make higher superannuation payments for their female employees if they wish to do so without contravening the existing legislation.

Here are some examples of ways in which women can increase their super balances to make up for any losses that may have been incurred:

  • Contribution splitting – by having their spouse transfer some of their superannuation contributions over to their account, their account can be increased.
  • Salary-sacrificing contributions into their super to make up for the shortfall from not working in previous year.

If you are concerned about your superannuation, or would like further advice, please speak with us.

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