March 5, 2021
Natallia Smith
(TruWealth)
Increased super contribution caps from 1 July 2021
This week, the Australian Bureau of Statistics indicated that superannuation contribution caps will be indexed from 1st July 2021, in line with the increase in average weekly ordinary time earnings (AWOTE) reported in the December 2020 quarter.
Average Weekly Ordinary Time Earnings
The ABS Average Weekly Earnings survey is designed to measure the level of average earnings in Australia at a particular point in time. Movements in average weekly earnings can be affected by changes in the:
level of earnings per employee
composition of the labour force
Factors which can contribute to compositional change include variation in the:
proportion of full-time, part-time, casual and junior employees
occupational distribution within and across industries
distribution of employment between industries
distribution of hours worked and paid for
It does not include overtime and is calculated before taxation and any other deductions are made.
In relation to superannuation indexing, this means the:
Concessional contribution cap
should rise by $2,500 pa to $27,500 pa
and the
Non-concessional contribution cap
should rise by $10,000 pa to $110,000 pa
You will only have an NCC cap in 2021-22 if your Total Super Balance (TSB) is less than $1,700,000 at June 20, 2021. (This balanced was increased from $1,600,000 due to the previously announced indexation of the Transfer Balance Cap and TSB threshold.)
The standard NCC cap, including NCC bring-forward thresholds, expected to apply from 1 July 2021 are:
Total Super Balance < $1.48 million (at 30 June 2021)
Available NCC cap in 2021-22* is $330,000
Bring-forward period is 3 years
Total Super Balance $1.48 – < $1.59 million (at 30 June 2021)
Available NCC cap in 2021-22* is $220,000
Bring-forward period is 2 years
Total Super Balance $1.59 million – < $1.7 million (at 30 June 2021)
Available NCC cap in 2021-22* is $110,000
Bring-forward period is Standard NCC cap only
Total Super Balance ≥ $1.7 million (at 30 June 2021)
Available NCC cap in 2021-22* is NIL
Bring-forward period is N/A
*Not in a previously triggered bring forward period
Other superannuation thresholds for 2021-22 will be issued once the ATO publishes this, and other relevant superannuation and tax threshold increases for 2021-22.
If you would like to review your superannuation or understand more about super contribution caps, please contact TruWealth on 03 8648 6534 or email contact@truwealthadvice.com.au
This is general advice and does not consider your particular circumstances. You should not act on this advice without speaking to Truwealth Advice who can consider if it is right for you.