18 Mar 2021
Superannuation: AWOTE Indexation
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
From 1 July 2021 the concessional and non-concessional superannuation contribution caps are set to increase due to Average Weekly Ordinary Time Earnings (AWOTE) indexation.
The concessional contribution cap was set at $25,000 from 1 July 2017 and will increase to $27,500 pa from 1 July 2021.
The non-concessional contribution cap is calculated as four times the concessional contribution cap and so will increase from $100,000 to $110,000 from 1 July 2021.
This also changes the maximum amount a member who was under 65 at the start of the year can contribute under the non-concessional contribution cap bring-forward rule from $300,000 to $330,000 from 1 July 2021.
The general transfer balance from superannuation accumulation to superannuation pension will also increase from $1.6m to $1.7m due to AWOTE indexation on the 1 July 2021.
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This is excellent news because it allows each of us to contribute more money into a concessionally taxed environment called superannuation where the maximum tax rate on earnings is no more than 15% while the maximum personal marginal tax rate is 45% plus 2% Medicare plus 1.5% Medicare Surcharge.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.