For many of us, the month of July brings new beginnings yet a sense of deja vu fills the air as the pandemic continues to impact everyone’s lives. From 1 July 2021, some SMSF rules have not changed but quite a lot has so it is important to ensure all trustees are aware of these and they do not get caught out.
WHAT’S NEW FROM 1 JULY 2021?
Superannuation Guarantee (SG) rate increase
The new SG rate has increased to 10% (up from 9.5%).
Contribution cap increases
The increased contribution caps are as follows:
- Concessional $27,500 (up from $25,000)
- Non-concessional $110,000 (up from $100,000) or up to $330,000 under the bring forward provision (up from $300,000).
Traps in the bring forward provision:
- whether a member can trigger the bring forward provision will depend on their Total Super Balance as at 30 June 2021
- the bring forward provision age has been increased to age 67 so individuals aged 65 and 66 at any time in a financial year are now eligible to trigger the bring forward provision, and
- members that triggered the bring forward arrangement before 1 July 2021 will not have access to any additional cap space as a result of the increase in non-concessional cap – i.e. only a maximum of $300,000 can be contributed
Re-contribution of COVID-19 early release superannuation amounts
Where an individual has previously received a COVID-19 early release of superannuation, they will be able to re-contribute up to the amount they received without the contributions counting towards their non-concessional cap. These contributions:
- can be made between 1 July 2021 and 30 June 2030
- cannot exceed the total amount of super accessed under the COVID -19 early release, and
- cannot be claimed as a personal superannuation deduction.
Those wishing to do this need to notify their super fund in the approved form, either before or at the time of making the re-contribution.
Abolition of Excess Concessional Contributions Charge
Individuals who make contributions on or after 1 July 2021 that exceed their excess concessional contributions cap, will no longer be liable to pay the excess concessional contributions charge.
Transfer Balance Cap increase
The general Transfer Balance Cap will increase to $1.7m (up from $1.6m).
Every member will have their own personal Transfer Balance Cap depending on whether they have ever had a retirement phase pension or received a death benefit pension prior to 1 July 2021.
Member fund size increasing to six
SMSFs will now be able to have a maximum of six members instead of four.
Market valuations for investments
Trustees are now required to obtain market valuations on all investments annually including property and collectables. The ATO has specifically stated market valuations do not include a real estate appraisal unless it contains objective and supportive data.
SMSF rollovers via SuperStream
From 1 October 2021 all SMSFs will be required to use SuperStream to rollover superannuation monies between funds.
WHAT HAS STAYED THE SAME?
Reduced minimum pension requirements
The 50% reduction in the minimum pension requirement due to Covid-19 will continue to apply in the 2021-22 financial year as follows:
|Age at 1 July 2021||Reduced Minimum Percentage|
|65 – 74||2.5%|
|75 – 79||3%|
|80 – 84||3.5%|
|85 – 89||4.5%|
|90 – 94||5.5%|
|95 and over||7%|
Work test abolition for individuals aged 65 and 66
Members aged between 65 and 66 can make voluntary contributions (previously restricted to people below 65) without meeting a work test. This applies to both concessional and non-concessional contributions.
If you have any questions in relation to the above changes, please don’t hesitate to contact your client manager.
Kreston Stanley Williamson Team
*Correct as of 16 July 2021
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under professional standards legislation.