What you need to know
There haven’t been many changes in superannuation over the last few years but it’s always good to make sure that you are across what is available to you with regards to your super.
Concessional superannuation contributions
The concessional superannuation cap for the year ended 30 June 2021 is $25,000. This means that total tax deductible contributions which can go into your superfund cannot exceed this amount – this includes any amounts that have been contributed by your employer including salary sacrifice. If you were to choose to “top up” any employer contributions, you can claim a deduction for the top up to $25,000.
As in prior years, the contribution must be received by your fund before the 30 June 2021 to claim a tax deduction for it in the 2021 year and you must notify your super fund of your intention of claiming a deduction.
Carry-forward unused concessional contributions
Individuals can “carry forward” unused concessional contributions from the 2019 and 2020 financial year. If your total superannuation balance is less than $500,000, this provision allows you to make contributions this year to use up any unused concessional cap from the 2019 and 2020 financial years. Unused cap amounts can be carried forward for up to five years before they expire.
For example, if in the year ended 30 June 2020, concessional contributions had been made into a fund of $15,000, the “unused” portion of the concessional cap of $10,000 can now be carried forward. This means an additional contribution of $10,000 could be put into superannuation with a tax deduction claimed for it, along with $25,000 for the current 2021 financial year.
In the recent Federal budget there were two notable changes announced with regards to superannuation – please note, these are only announcements and are not yet legislated. It is anticipated that both of these changes will apply from 1 July 2022.
- The “downsizer contribution” will now be available for individuals who are over 60 years (rather than 65 years) to contribute up to $300,000 into superannuation from the proceeds of the sale of their home
- The work test for people aged between 67 and 74 will no longer apply to non- concessional and salary sacrifice contributions. However, the existing $1.6 million cap on lifetime superannuation contributions will continue to apply (increasing to $1.7 million from 1 July 2021). Access to concessional personal deductible contributions for individuals aged between 67 and 74 will still be subject to meeting the work test.
Changes to caps and thresholds
From 1 July 2021 (so effective for the 2022 year financial year) the caps and thresholds with regards to superannuation will be indexed. The most notable changes are:
- The concessional superannuation contribution cap will increase from $25,000 to $27,500
- The non-concessional superannuation contribution cap will increase from $100,000 to $110,000 (with the 3 year bring forward rule for non-concessional contributions increasing to $330,000)
- The transfer balance cap will increase from $1.6M to $1.7M
- The Division 293 threshold will stay at $250,000
- The Capital Gains Tax cap amount for superannuation contributions will increase from $1.565M to $1.615M
As always, if you have any questions in relation to the above, please contact your Holman Hodge adviser.