The 2021–22 Federal Budget announced in May 2021 revealed changes to the superannuation rules that all businesses need to know.
$450 threshold is gone
Australia's Superannuation Guarantee (SG) applies to all employees and contractors who perform work for wages and are over 18, so long as they make at least $450 a month before taxes. That means, unless your workplace agreement states otherwise, employers are compelled to contribute 10%, increasing to 10.5% as of 1 July 2022, of each eligible employee's Ordinary Time Earnings.
Be sure you have identified all eligible employees under this new rule to remain in compliance with the law. You may need to check for 'stapled' super funds. Otherwise, newly eligible employees will need to fill out the Standard Choice Form.
Downsizer scheme got younger
Employees can enter into a salary sacrifice agreement to contribute even more to their super fund, and save more for retirement. One way to do this is to make a one-off, $300,000 contribution after selling a home. The age to qualify for this downsizer scheme has been dropped from 65 to 60. Be sure that your company super fund liaison is aware of this possibility.
First Home Super Saver scheme withdrawal is bigger
For those contributing funds to this scheme, the maximum withdrawal has gone up to $50,000 from $30,000. This is great news for individuals and couples saving for their first home. Couples can now access $100,000 from their FHSSS to put toward their first home purchase.
Bye-bye work test
The work test was to determine if people aged 67–75 could make pre-tax contributions to their superannuation and claim a lower tax rate. Come 1 July 2022, the work test is no longer required. People aged 67–75 can top off their funds under $1.6 million. That contribution ceiling rises to $1.7 million in July.
These changes to the SG are important for employers to act on to remain in compliance and avoid messy disputes that could involve the Australian Securities and Investments Commission or the Australian Taxation Office.
Be sure to never offer financial advice to your employee. Instead, refer employees with questions about superannuation to impartial and free online information, super fund comparison tools and resources are provided by the ATO.
If you need advice on how to set up your accounting and payroll systems to accommodate the superannuation rule changes, WMC Accounting can help. Contact us today to learn how.