Last night the FY2021-22 Federal Budget was handed down. In this article we will review some of the proposed implications to superannuation.
Super Guarantee set to increase
Super Guarantee (SG) contributions, currently set at 9.5%, will increase to 10% in July 2021, and by July 2025 will increase to 12% of your employees’ base wage. At this stage, the below changes are proposals only. For them to take effect, they need to be passed into law.
The $450 per month income threshold will be removed
Currently, employers only need to make SG contributions for employees that are 18 years and older and are paid $450 or more (before tax) per calendar month.
From 1 July 2022, the Government has announced they’ll remove the $450 per month income threshold and employers will be required to pay SG contributions to all eligible employees aged 18 or older, regardless of their income. This is a significant change to employers with a young or a casual workforce.
Fewer restrictions on contributions for older Australians
If you have employees aged between 67 to 74 they will have more opportunities to contribute to their super as the work test will be removed if they make or receive ‘non-concessional’ or ‘salary sacrificed’ contributions, subject to existing contribution caps.
More for first home savers
First home buyers will be able to withdraw up to $50,000 of their voluntary super contributions under the First Home Super Saver Scheme. This increased from $30,000.
Investment incentives and tax cuts
The Government is extending temporary full expensing for an additional year until 30 June 2023. Temporary loss carry-back is also being extended to include the 2022-23 income year.
In addition, reducing the tax rate for small and medium companies, from 30 per cent in 2014-15 to 25 per cent from 1 July 2021.
Your Future, Your Super
Although no further announcements were made in the Budget, the legislation is scheduled for debate in the House of Representatives on Wednesday 12 May. If passed, likely to progress to the Senate in June at the earliest. We will continue to update you with further information as it comes to hand and reach out to our team for information and support.