Advivo Business Advisors and Accountants explain all the superannuation changes you need to know and what it means for your business.
As part of the recent Federal Budget update, the Treasurer announced some significant changes to Superannuation that affect employers. We can help you understand the impact they will have on how you manage your superannuation obligations and make sure you stay compliant.
Here is a snapshot of the recent superannuation updates:
- Catch up contribution – From 1 July 2018, the unused concessional contribution cap, i.e. $25,000, can be carried forward for up to 5 years. The catch-up concessional contribution is available for members under the $500k balance as of 30 June previous year. The non-concessional contribution remains the same.
- Minimum drawdown – The ATO has extended the reduction in the minimum superannuation drawdown for a further year to 30 June 2022.
- Concessional Contribution Cap – The concessional contribution cap will be indexed to $27,500 from 1 July 2021.
- Non-Concessional Contribution Cap – The non-concessional cap indexed to $110,000 from 1 July 2021.
- The general transfer balance cap (also known as 1.6m cap) will be indexed to $1.7 million on 1 July 2021. Please note when the cap is indexed to $1.7 million, there won’t be a single cap that applies to all individuals. “Every individual will have their own personal transfer balance cap of between $1.6 million and $1.7 million, depending on their circumstances.
- Change to work test – From 1 July 2020, the work test requirement increased from 65 to 67. What is a work test? If you are above 67 (formally 65), you needed to have worked at least 40 hours within 30 consecutive days in a financial year before your super fund could accept the non-concessional contribution.
- Property valuation – Under the ATO valuation guideline, the one-page curbside valuation from a real estate agent is no longer sufficient. The valuation can still be done by a real estate agent. However, it needs to include supporting data, i.e. comparable sales, to support the valuation.
2021 Budget Change (Not yet law):
- Downsizer contributions – From 1 July 2022, the eligible age reduced from 65 to 60.
- Repealing the work test – From 1 July 2022, individuals between 67-74 will be able to make a non-concessional (personal) contribution and salary sacrificed contributions without meeting the work test. They will still be required to meet the work test to claim a deduction for personal concessional contributions.
- Extending the bring forward age to 74 – the proposed change to allow bring forward to age 74 (previously 67) subject to the usual eligibility criteria.
- Increase the amount withdraw under FHSSS – The First Home Super Saver Scheme (FHSSS) withdrawal increased from $30,000 to $50,000.
Other areas ATO focus on:
- Investment Strategy – The ATO and auditors focus on the SMSF fund to ensure the investment strategy is formally formulated and the investment follows the investment strategy. This will be something to review and consider to ensure the fund is compliant.
- Trust Deed update – Ensure the trust deed is regularly updated with the changes to the super fund regulations. The latest deed upgrade includes, 6 members funds, detail of the rules change on binding death benefit nominations and penalties/orders.
To ensure you’re up to date with these latest changes for your business, the team at Advivo Business Advisors and Accountants are here to help! Contact us today.