The 2021 Federal Budget handed down on Tuesday 11 May focused on creating jobs, lowering unemployment rates and improving the aged care system. And when it comes to super, there’s something for (almost) everyone – with changes that help support women and young people as well as increasing flexibility for older Australians.
A female-friendly Budget
Women’s safety and the need to support women was embedded in this Budget, with initiatives like increased subsidies for childcare designed to support women returning to work. The Government also expects to support 200,000 women with the compulsory payment of super for employees earning less than $450 per month.
Extra help for first home buyers
The First Home Super Saver Scheme is set to see an increase to the maximum amount that can be released, from $30,000 to $50,000. This builds on the existing scheme, further helping first home buyers save for a house deposit in a tax effective way by using additional voluntary super contributions.
The superannuation rate gets a boost
The stable economy has paved the way for the Government to proceed with the legislated compulsory superannuation rate increase. Although it wasn’t announced as part of the Federal Budget, from 1 July 2021, the compulsory superannuation rate will be increasing from 9.5% to 10%.
This is part of a set of rules already in place that would see the superannuation rate progressively increase to 12% by 1 July 2025, further improving retirement outcomes for working Australians.
More flexibility for older Australians
A couple of new measures will give older people wanting to add to their super greater flexibility.
Firstly, the Government has agreed to remove the ‘work test’ for self-funded retirees aged 67 to 74 years old. Currently, people aged 67 to 74 years have to meet a work test of working 40 hours over a 30-day period to be able to make extra contributions into their super account (excluding the Downsizer scheme – more on that below). The work test will be removed for non-concessional contributions (like any contributions you might make after tax), and remain for eligible people wanting to access concessional personal deductible contributions.
In addition, the Government announced its plans to extend the Downsizer contribution scheme by lowering the age requirement to 60 years old. The scheme currently allows eligible people aged 65 or older to make a Downsizer contribution into their superannuation of up to $300,000 (or $600,000 for a couple) from the proceeds of selling their home.
Have any questions about your Super? Give us a call on 1300 652 770.