Despite a focus on dealing with the pandemic during 2020, several key legislative initiatives have either been recently introduced or are before parliament now. Recent changes that are now in place include:
- SIS regulation has been amended to extend the eligibility to accept contributions to individuals 65 and 66 years of age without having to pass the work test. This includes both non-concessional and concessional contributions.
- You can make contributions to your spouse up to the age of 74, previously this was 70.
Changes currently before parliament include:
- The extension of the three year bring-forward rule to align with the increase in eligibility to accept contribution for members aged 65 and 66. Once passed this will be effective from 1 July 2020.
- Increasing the maximum number of members in a SMSFs and SAFs from four to six.
- Streamlining ECPI, this includes the need for an actuarial certificate if fully in pension phase and simplified calculations when funds go between accumulation and pension during the year.
Changes to contributions allow for new contribution strategies for members to build their balances later in life.
From 1 July 2021 the transfer balance cap (TBC) increases from $1.6m to $1.7m, however existing pensions will only be eligible for a proportion of this increase - if at all. The increase in your transfer balance cap will be the proportion of the maximum $1.6m previously used. This means if you started a pension with $800k, and used 50% of your total transfer balance cap, you will be allowed 50% of the $100k increase (or $50k) from 1 July 2021. A maximum $1.7m will be allowed for all new members that start a pension for the first time after 1 July 2021.
Indexation will also increase your total superannuation balance from $1.6m to $1.7m from 1 July 2021. However, the impact on contribution caps and bring forward contributions is currently unknown, mostly due to the fact that contribution caps use an Awote index and not a CPI index to calculate the increase. Given the May 2020 Awote index was greater than the trigger for an increase, it's likely we will see an increase in non-concessional caps to $110,00 and concessional caps to $27,500 from 1 July 2021. This will be confirmed in March 2021.
Your thresholds to contribute the maximum $330,000 under the bring forward rules will now be less than $1.48m (i.e. $1.7m less 2 x $110k) as at 1 July 2021.
There are still several Covid-19 initiatives introduced in 2020 that will still be around in 2021. These include:
- Temporary reduced minimum pension – applies to 2020-2021 financial year
- Temporary rent relief – Inhouse asset relief and deferred rental will apply to 2020-2021 financial year
- Residency issues – Still applies for trustees trying to get back to Australia
- Related party LRBA relief – Initial six-month relief extended four months only
COVID-19 has brought about a significant change in how businesses operate in the virtual world. This includes the use of paperless technologies and digital record keeping. To assist businesses and individuals the federal government and several state governments introduced legislation to allow the use of electronic measures to aid signing of documents.
The Corporations Act was changed to allow Trustees to sign financial statements electronically.
Three states also introduced their own temporary legislation to tackle this issue. NSW (law expires 31/12/21), QLD (law expires 30/4/21) and Victoria (expires 26/4/2021) allow many legal documents, including Trust deeds, to be signed electronically.
The Federal Government have announced they will be looking to make some of these changes permanent.