Superannuation Guarantee, Concessional Contributions Cap and Salary Sacrificing – Time to Review
From 1 July 2021, the superannuation guarantee charge rate (SGC) that employers are required to contribute to employees’ superannuation has increased from 9.5% to 10%. These contributions form part of your concessional contributions cap.
Since 1 January 2020, salary sacrificed contributions will no longer be able to be considered SGC contributions by employers. Employers must make the 10% SGC contributions over and above any salary sacrifice arrangements in place.
Concessional contributions are tax deductible contributions made either by individuals who claim the deduction in their personal tax return or employers either as SGC or salary sacrificed contributions for their employees. Concessional contributions have a cap and this cap was increased from $25,000 to $27,500 on 1 July 2021.
Due to the increase in the SGC rate, the change to salary sacrifice contributions not being able to be used to meet employer SGC obligations and the increase in the concessional contributions cap, those employees who are salary sacrificing superannuation should review/update their salary packages and contribution amounts to ensure they maximise but not exceed the increased concessional contributions cap. Those individuals who contribute personally should similarly review/update their contribution amounts to also ensure they maximise but not exceed the increased concessional contributions cap.
With any information, we have not considered your personal situation in this article nor taken into account your individual, financial situations and needs. Therefore, before proceeding you should speak to your tax professional &/or your financial adviser. If you wish to discuss how the above affects you or if you have any other questions, please do not hesitate to contact our office on 1300 620 345.