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• Partner News: Recent changes to superannuation – what you should know

Partner News: Recent changes to superannuation – what you should know

Nexia Australia is a full service accounting and advisory firm and a long-standing partner of the Association Forum. In this member article Nexia Financial Adviser Victoria Habra highlights a number of significant super changes which came into effect on 1 July 2021.

The concessional cap finally increased

The standard concessional cap increased from $25,000 to $27,500 on July 1, 2021. This cap is available to everyone who can contribute, regardless of their total superannuation balance.

In addition, employer superannuation guarantee contributions increased from 9.5% to 10%.

The non-concessional cap (NCC) increased too

The non-concessional cap increased to $110,000 for 2021/22.

Where eligible, an individual may be able to bring forward up to three years’ worth of NCCs using the bring-forward rule (i.e. up to $330,000 for 2021/22). 

There are three tests used to calculate if the non-concessional contributions caps of future years can be brought forward:

• The first test compares the member’s total super balance at the previous 30 June to the general transfer balance cap ($1.6m to 30 June 2021; $1.7m from 1 July 2021) in the year the bring forward is triggered.

• The second test concerns the member’s age. The extension of the non-concessional contribution bring-forward to people below age 67 on July 1 of the relevant financial year became law in June 2021 (previously age 65).

• The third test concerns the work test. Currently, to meet the work test, an individual over the age 67 must be gainfully employed for at least 40 hours in a continuous 30-day period during the year. In the 2021 Federal Budget, the Federal Government announced that the work test is to be abolished for members between 67 and 74, but this change is not expected to come into effect before 1 July 2022.

6-member self-managed superannuation funds (SMSFs)

The long awaited move to increase the maximum number of members of an SMSF from four to six came into effect from 1 July 2021. It’s a win for people wanting to expand the membership of their SMSF and opens up a range of possible strategies available to an increased SMSF membership.

Time to revisit your superannuation strategies

These changes provide opportunities to contribute more to superannuation. However, the rules are complex, and each individual may have different amounts available to them. It’s therefore a good time to revisit the superannuation strategies available to you this Financial Year.

If you would like more information about these superannuation changes and how they can benefit you, we invite you to contact Nexia Financial Adviser, Victoria Habra on VHabra@nexiasydney.com.au. Learn more about Victoria here.