Additionally, the annual concessional contribution cap increases from $25,000 to $27,500 as a result of indexation in line with changes to average weekly ordinary time earnings from 1 July 2021. The concessional contribution cap was last increased in 2017.
Lastly, if the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 is passed during June 2021, superannuation stapling will be introduced from 1 July 2021, requiring employers to contact the ATO when hiring new employees to identify their nominated complying superannuation fund, for payment of superannuation guarantee contributions.
An increased superannuation guarantee percentage rate
The Superannuation guarantee percentage rate increases from 9.5% to 10% from 1 July 2021. The guarantee percentage rate last increased by 0.25% in 2014.
Future increases of 0.5% are forecast each year from 2022 until 2025 at which time the guarantee percentage rate will be 12%.
For many employers, the increased guarantee percentage will be an additional cost, however, employers who have contractually agreed a total salary package with their employees that include superannuation guarantee contributions may be able to reduce salary payments to employees to offset the higher contribution rates. If you would like more information about this, or if you would like us to check your current superannuation arrangements please get in touch with our Employment and Workplace Relations Team on 08 9321 0522.
Annual concessional contribution caps increase
The annual concessional contribution cap increases from $25,000 to $27,500 from 1 July 2021. The last increase to the concessional contribution cap was in 2017 and this year’s increase is being made to reflect changes in average weekly ordinary time earnings.
Employee superannuation account stapling
The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 is currently before the Australian Parliament and may pass into law before 1 July 2021.
One of the changes the Bill provides is that if a new employee has an existing ‘stapled’ superannuation fund and does not choose a new fund to receive contributions, the new employer is required to make contributions on behalf of the employee into the stapled fund. The policy aim announced in October 2020 is to reduce the number of employees with unintended multiple superannuation funds from 1 July 2021.
An employer will determine whether an employee has a stapled fund by contacting the ATO. Go-live details are expected to be published by the ATO once the Bill passes into law.
Key take-aways
- Employers must prepare for changes to the superannuation guarantee percentage rate and annual concessional contribution caps from 1 July 2021 to ensure that they continue to be compliant.
- Employers should review their current employment contracts to identify any increases in superannuation guarantee payments that need to be made, or changes to the total remuneration paid to employees to absorb the increased superannuation guarantee rate.
- If the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 passes into law during June 2021, then employers will need to contact the ATO when hiring new employees to check on whether the new employee has a stapled superannuation fund for receiving superannuation guarantee contributions.
If you would like to know more about the proposed changes or ways in which Panetta McGrath Lawyers can help your business plan for changes beyond 2021, please contact our Employment and Workplace Relations Team on 08 9321 0522.
