With the new financial year fast approaching, it’s worth noting the legislated increase to the Superannuation Guarantee (SG) contribution rate effective 1 July 2022.
As per the table below, next financial year the SG rate will increase to 10.5%, on its path to 12% by July 2025.
Super Guarantee (SG) rate
|Legislated Rate (%)
These gradually increasing contributions are designed to create a better base of retirement savings for retirees, and it’s worth noting a few important points that are often overlooked:
- SG contributions count towards the “Concessional Contributions Cap” (currently $27,500 per financial year). This limit includes Salary Sacrifice, personal deductible contributions, and any employer-paid insurances in super, so the increase may affect your salary sacrifice plans if you are targeting this contribution limit.
- For higher income earners, the Maximum Superannuation Contribution Base is the income level (per quarter) above which SG super becomes optional. In the 2021/22 financial year this earnings figure is $58,920 per quarter ($235,680 pa). Beyond this level, SG may not be payable, subject to your employer’s HR policy.
- SG contributions alone may not meet your retirement income expectations: depending on your employment and income history, contribution rate, investment style, or retirement income and age expectations, you may fall short. Ideally you should consider using one of the many retirement projection tools, and consider adjusting your plan with additional contributions, revising your planned retirement age or target income level.
If tailoring your retirement savings plan is something you need help with, please contact us here at AGS Financial Group.
Planning contributions before 30 June?
The lead-up to 30 June is a time when many individuals consider their super contribution options, and tax planning considerations more broadly. Super contribution options include:
- Salary Sacrifice
- Personal (tax deductible) contributions
- Personal after-tax contributions
- Spouse contributions
- Personal contributions targeting a government co-contribution.
When making any of the above contributions, please remember to allow sufficient processing time for your super fund to record the contribution before 30 June.
On the other hand, if you have been making regular contributions to super throughout the year via payroll, now is also a good time to check on how you are tracking towards the concessional contributions cap and advise your payroll department of an amendments that might be necessary.
Tax Planning Webinar
With 30 June fast approaching, now is the time to consider your tax planning opportunities, including those that may apply to you or your business thanks to the federal budget. Whether you’re an employee or a business owner, you’re invited to join us for our Tax Planning webinar, on Tuesday 26th April at 11am. Register here to attend live or receive the replay.
Published : 11 Apr 2022