Increases to Superannuation Contribution Caps from 1 July 2021

The Australian Taxation Office ( ATO ) has recently confirmed increases to a number of superannuation key rates and thresholds.

From 1 July 2021, Australians will be able to contribute more into their superannuation fund as the concessional and non-concessional contribution caps and the general transfer balance cap are set to increase due to indexation for the first time in four years.

Employers must pay Superannuation Guarantee contributions at the current rate of 9.5 per cent of an eligible worker's earnings into a super account.  Under the transitional increases, the minimum contribution rate will rise to 10 per cent on 1 July 2021, and gradually increase up to 12 per cent by 1 July 2025.

 

Concessional contributions are contributions that are made into your super fund before tax, including through salary sacrifice arrangements, and are taxed at a rate of 15% in the superannuation fund.  The annual concessional contribution cap will increase on 1 July 2021 from $25,000 to $27,500.

 

Non-concessional contributions are contributions that are made into your super fund after tax is paid.  The annual non-concessional contribution cap will also increase on 1 July 2021 from $100,000 to $110,000.

 

The transfer balance cap is a limit on how much superannuation can be transferred into a tax-free retirement account, and this cap will also increase on 1 July 2021 from $1,600,000 to $1,700,000.