Need to know
Outlined below are all the latest news you 'need to know'.
|Issue||What it means||What do you need to be thinking about?|
|Australian Taxation Office|
The ATO have indexed several super rates and thresholds
The ATO has released several important superannuation rates and thresholds for the 2021/22 financial year.
Some notable changes include increases to the:
Review your clients’ salary sacrifice arrangements considering the higher concessional cap and SG rate. Clients with catch-up concessional contributions may have a higher concessional contribution cap.
The non-concessional contribution cap may also be affected by your client’s total super balance and the availability of the bring-forward rule.
Clients who have already used at least part of their transfer balance cap will be entitled to an increase in their transfer balance cap in proportion to their smallest unused amount. See ‘what the increase in the general transfer balance cap means’ for further reading.
It may be necessary to update affected assumptions in any financial modelling tools.
|From the Department of Social Security (DSS)|
Many Centrelink rates and thresholds will be indexed on 1 July 2021. Notable changes include an increase in the income and asset test thresholds for social security pensions.
It will be necessary to apply these new benefit and payment rates when estimating Centrelink entitlements.
Clients who were previously not entitled to a benefit and were marginally above the upper income and/or asset test threshold may be entitled to a small benefit.
The Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 has received Royal Assent. The new legislation extends the NCC bring forward rule to clients under age 67. The change is retrospective to 1 July 2020.
The new legislation also:
Clients wishing to take advantage of the bring-forward rule should confirm contribution cut-off dates as we approach 30 June.
Excess concessional contributions will still be automatically added to the client’s personal assessable income and taxed at personal marginal tax rates less a non-refundable tax offset equal to 15%.
Clients will not be eligible to claim a personal tax deduction on amounts they elect to treat as COVID-19 re-contributions. To be eligible, re-contributed amounts must be made between 1 July 2021 and 30 June 2030. The total amount of contributions covered under this exemption must not exceed the COVID-19 release amount.
The Treasury Laws Amendment (Your Future, Your Super) Bill 2021 has received Royal Assent.
The new legislation seeks to limit duplicate superannuation accounts and introduces performance testing for certain superannuation products.
Employees who start a new job on or after 1 November 2021 will have employer super contributions directed to their existing ‘stapled fund’ (defined in the regulations) if one exists, unless the new employee chooses another fund.
An employer can only contribute to their default fund where the employee has no stapled fund or does not choose a fund.
Employers will obtain information about the employee’s existing superannuation fund from the Australian Taxation Office if it is not provided by the employee.
The Treasury Laws Amendment (Self-Managed Superannuation Funds) Bill increases the maximum Number of members allowed in a self-managed superannuation fund and Small APRA fund from four to six from 1 July 2021.
Advisers should note that some states including NSW only permit up to four individual trustees. Members who are impacted by state-based law limitations will have to consider a corporate trustee if they wish to expand the SMSF to 5 or 6 members.
If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.
The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.