12/05/2021
VICSUPER FEDERAL BUDGET WRAP 2021
Last night's Federal Budget opened with an acknowledgment of the significant work undertaken by many of our members - Australia's front-line workers - nurses and other healthcare professionals, emergency services, and those who support our education and aged care sectors. We would like to join the Treasurer in extending our deepest gratitude to the frontline workers who support our communities by doing good for all.
Here are the key changes to superannuation, impacting the retirement outcomes of our members and some of these changes may impact your organisation.
Key points from this year's budget
Removing the $450 per month threshold for Super Guarantee (SG) eligibility
What’s changed?
From 1 July 2022, SG will be paid on all wages.
What it means for your staff and you
All employees – casuals, part-timers, and permanents will have super paid on their earnings even if they earn less than $450 per month. For staff who work across a number of jobs, this means they may be able to save more through super.
First Home Super Saver scheme contribution threshold boosted
What’s changed?
Increased from $30,000 to $50,000 from 1 July 2022
What it means for your staff
People saving for their first home will be able to save more through super. From July 2022, a couple will be able to save up to $50,000 each through voluntary contributions such as salary sacrifice and after-tax contributions. Annual contributions for First Home Super Saver Scheme remain at $15,000 (after fees and taxes).
Downsizer contributions – minimum age lowered to 60 years
What’s changed?
From 1 July 2022, the minimum age for the downsizer contribution will be lowered from 65 to 60. This will allow Australians nearing retirement to make a one-off after-tax contribution of up to $300,000 for an individual, or $600,000 for a couple, when they sell their family home.
What it means for your staff
This improves the flexibility for Australians to contribute to their superannuation savings and may encourage people to downsize sooner and increase the supply of family homes.
Downsizer contributions can be made after the sale of a person’s principal place of residence, held for a minimum of 10 years. It is important to note that making these downsizer contributions may affect your staff’s eligibility for Centrelink pension.
Work test removed for retirees
What’s changed?
From 1 July 2022, people aged 67 to 74 will no longer need to meet the work test when making, or receiving, non-concessional (after-tax) superannuation contributions or salary sacrificed (before-tax) contributions. This means that if you have any employees who previously had to complete the work test, this will no longer be required.
What it means for your staff
This improves the flexibility for older Australians to continue to contribute into their super, allowing retirees to add more to their super more freely, without having to satisfy any test. Self-employed people or contractors who make Personal Concessional Contributions will still need to complete the work test.
No change to Super Guarantee (SG) contributions
Despite previous media coverage on the potential changes to the SG, the budget did not announce any further changes. SG is legislated to increase by 0.5% to 10% on July 1 2021 and will continue to increase by 0.5% per annum until 2025.
The VicSuper Team
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