Superannuation changes from 1 July 2021

About the author:

Terri Bradford
Author name:
By Terri Bradford
Job title:
Director, Wealth Management
Date posted:
01 June 2021, 11:40 AM

Changes to super come into effect from 1 July 2021. We outline the changes below.

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Superannuation contributions thresholds

  • Concessional Cap (CC): $27,500 pa per person
  • Non-Concessional Cap (NCC): $110,000 pa per person
  • 3-year Bring Forward NCC: $330,000 per person (must be under age 65)

Superannuation contributions flow chart

Total Super Balance = TSB

TSB less than $300,000 and I am retiring I may be able to contribute to super using the 12-month work test exemption for retirees aged 67 – 74
TSB less than $500,000 I may be able to utilise the catch-up concessional contributions
TSB less than $1.37 million I may be able to utilise the 3-year $330,000 bring forward non-concessional contribution limit
TSB more than $1.37 million but less than $1.48 million I may be able to utilise the 3-year $330,000 bring forward non-concessional contribution limit, however, it will depend on my TSB each 30 June during the 3-year period
TSB more than $1.48 million but less than $1.59 million I may be able to contribute up to $220,000 of the $330,000 bring forward non-concessional contribution limit
TSB more than $1.59 million but less than $1.7 million I may be able to contribute up to $110,000 non-concessional contribution limit, but I cannot use the 3-year $330,000 bring forward limit
TSB more than $1.7 million I am not able to make non-concessional contributions but I may be able to contribute to super under other limits such as concessional, small business CGT or seniors downsizing (if eligible)

Source: Australian Taxation Office, Morgans 

Work test

If under age 67, a person must complete 40 hours of gainful work over 30 consecutive days prior to making contributions to superannuation.

This does not include domestic activities.

Total super balance (TSB)

As at 30 June of the previous financial year:

  • 12-month work test exemption for retirees: TSB is $300,000
  • Catch-up concessional contributions: TSB is $500,000
  • Ability to make 3-year bring forward NCC: Depends on TSB if it is between $1.37 million up to $1.7 million (no NCC at all if >$1.7 million)

Pension transfer balance cap (TBC)

Individuals who start their first retirement phase income stream on or after 1 July 2021 will have a tax exempt retirement income stream of $1.7 million.

A proportionate rule will apply if a person has previously triggered their TBC before indexation on 1 July 2021.

  • If a person did not utilise the entire $1.6 million cap, indexation will be a proportion of the amount remaining against their cap (as a percentage of the $100,000 indexed amount).
  • If a person has fully utilised $1.6 million TBC before indexation on 1 July 2021, their personal cap remains at $1.6 million. That is, no indexation applies.

Defined benefit income cap

The defined benefit income cap which determines tax treatment of defined benefit income stream will be at $106,250 p.a.

Seniors downsizing cap

The downsizer contribution is capped at a once off total amount of up to $300,000.

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