From 1 July 2024, there are significant superannuation regulation changes that may affect your SMSF. We are currently updating the contents on our website progressively to reflect these post 1 July 2024 changes. In the meantime, you may refer to the summary below for the key Superannuation Rates and Thresholds changes.
Concessional Contributions Changes
1. Annual Concessional Contribution Cap Increases to $30,000
Concessional Contributions are contributions where a tax deduction has been claimed, either by the Member or by an Employer. Concessional Contributions include the following Contribution Types:
- Employer Contributions
- Salary Sacrifice Contributions
- Personal Contributions where a tax deduction is claimed
From 1 July 2021 to 30 June 2024, the annual Concessional Contributions Cap was $27,500 per member. From 1 July 2024, the Concessional Contributions Cap increases to $30,000. The increase is a result of indexation in line with average weekly ordinary time earnings (AWOTE).
The limit applies to the total of your Employer, Salary Sacrifice and Personal Concessional Contributions.
We caution that you cannot make voluntary Concessional Contributions if you are over age 75 (a special rule applies if you are turning 75). You are also required to meet a Work Test or be eligible for the Work Test Exemption in order to make Personal Concessional Contributions if you are aged between 67 and 74.
2. Super Guarantee Rate Increases to 11.5%
Superannuation Guarantee Contributions (SGC) are contributions made by an Employer for the benefit of an SMSF member.
From 1 July 2023 to 30 June 2024, your Employer was required to contribute a minimum of 11% of your before-tax salary income into your super account.
From 1 July 2024 to 30 June 2025, your Employer is required to contribute a minimum of 11.5% of your before-tax salary income into your super account. In addition, the SGC rate is scheduled to increase to 12% in July 2025. Please click here to check the SGC rate on the ATO website.
Superannuation Guarantee Contributions, along with Salary Sacrifice Contributions and Personal Concessional Contributions count towards the Concessional Contributions Cap. If you intend to make Salary Sacrifice Contributions and/or Personal Concessional Contributions in addition to the Superannuation Guarantee Contributions made by your Employer, please ensure you will not exceed the Concessional Contributions Cap given your Superannuation Guarantee Contributions have increased after 1 July 2024.
3. Unused Concessional Cap Amount from the 2018/2019 Financial Year Has Expired
If your Total Superannuation Balance (TSB) on 30 June of the previous Financial Year is less than $500,000 and you have unused Concessional Cap amounts from the previous 5 years, you may make extra Concessional Contributions – above the General Concessional Contributions Cap.
Importantly unused Concessional Cap amounts are available for a maximum of 5 years and will expire after this. For example, the unused Concessional Cap amount from the 2019/2020 Financial Year will expire if it is not used up by the 2024/2025 Financial Year.
Accordingly, the unused Concessional Cap amount from the 2018/2019 Financial Year has expired by the end of the 2023/2024 Financial Year and should not be taken into consideration when determining your available Carry-forward Concessional Contributions for the 2024/2025 Financial Year.
You can view and manage your Concessional Contributions and Carry-forward Concessional Contributions using the ATO online services through myGov. Log in to ATO online services, select Super, then Information and navigate to Carry-forward Concessional Contributions.
Non-Concessional Contributions Changes
1. Annual Non-concessional Contributions Cap Increases to $120,000
Personal Contributions made into an SMSF from after tax income on which no tax deduction is claimed are known as Non-concessional Contributions. Non-concessional Contributions are personal contributions made into your SMSF from your own personal Bank Account and not from your Employer.
From 1 July 2021 to 30 June 2024, the annual Non-concessional Contributions Cap was $110,000 per member. From 1 July 2024, the Non-concessional Contributions Cap increases to $120,000. The increase is a result of indexation in line with average weekly ordinary time earnings (AWOTE).
We caution that you cannot make Non-Concessional Contributions if you are over age 75 (a special rule applies if you are turning 75) and/or have a Total Superannuation Balance which is equal or more than the general Transfer Balance Cap (i.e. $1.9 million for the 2024/2025 Financial Year) on 30 June of the previous Financial Year.
2. Changes to Total Superannuation Balance Thresholds for Bring-forward Cap
If you are aged under 75 at any time during the Financial Year, there is capacity to make Non-concessional Contributions of up to two or three times the annual Non-concessional Contributions Cap in that Financial Year. This is known as the bring-forward arrangement. It allows you to make extra Non-concessional Contributions without having to pay extra tax.
The thresholds which determine the amount of Non-concessional Contributions Cap that you can bring forward are calculated based on the annual Non-concessional Contributions Cap and the General Transfer Balance Cap. Accordingly, the thresholds have changed in the 2024/2025 Financial Year following the increase of the annual Non-concessional Contributions Cap to $120,000. The General Transfer Balance Cap remains at $1.9 million for the 2024/2025 Financial Year.
The following table sets out the bring forward cap and bring forward period for the 2024/2025 Financial Year depending on the individual’s Total Superannuation Balance on 30 June 2024:
Total Superannuation Balance
On 30 June 2024
|
Contribution and
Bring Forward Available
|
| Less than $1.66 million |
3 years ($360,000) |
| $1.66 - $1.78 million |
2 years ($240,000) |
| $1.78 - $1.9 million |
1 year ($120,000) |
| $1.9 million or more |
nil |
We caution that if you have already triggered the bring-forward arrangement prior to 1 July 2024 and are currently in an active bring forward period, your bring forward cap does not change even when the annual Non-concessional Contributions Cap has increased to $120,000.
Other Changes
1. Co-contributions
If your income is within the predetermined thresholds and you make a Non-concessional Contribution in a Financial Year, the government will match your contribution with a co-contribution up to certain limits if other criteria are met.
The income thresholds are indexed for the 2024/2025 Financial Year with the lower income threshold increases to $45,400 and the higher income threshold increases to $60,400.
For more information on the eligibility criteria for co-contribution, please visit the ATO website here.
2. Preservation Age is Now 60
Generally, you must reach preservation age before you can access your super. Your preservation age depends on your date of birth as set out in the following table:
| Date of birth |
Preservation Age |
| Before 1 July 1960 |
55 |
| 1 July 1960 – 30 June 1961 |
56 |
| 1 July 1961 – 30 June 1962 |
57 |
| 1 July 1962 – 30 June 1963 |
58 |
| 1 July 1963 – 30 June 1964 |
59 |
| From 1 July 1964 |
60 |
This means that from 1 July 2024, the preservation age will be 60 for all individuals who have not reached their preservation age before this date. Individuals who were born prior to 1 July 1964 with preservation age of below age 60 will have also turned 60 or older by now.
3. Low Rate Cap Increases to $245,000
When you are between your preservation age and 60 years old, the tax on Lump Sum withdrawals made (provided you are eligible) is affected by the low rate cap amount. The taxable component of the amount withdrawn which is below the low rate cap amount is tax free. The low rate cap amount for the 2024/2025 Financial Year increases to $245,000 (it was $235,000 for the 2023/2024 Financial Year).
However, given that the preservation age is now 60 for all individuals who have not reached their preservation age prior to 1 July 2024, and Lump Sum withdrawals made (provided you are eligible) after age 60 are tax free, the low rate cap is no longer relevant after 1 July 2024.
Seek Professional Advice from a Financial Adviser
ESUPERFUND is a no advice model and does not provide financial advice to clients. We recommend that you seek professional advice from a financial adviser. A licensed financial adviser will consider your personal situation and make a recommendation suitable to your particular financial needs.
It should always be remembered that Trustees are legally responsible for all the decisions made even if you obtain advice from a Financial Planner. Whilst a Financial Professional can provide advice and assistance you are ultimately responsible for the SMSF.