What can you do before 1 July 2024, and what changes with the new financial year?
Understanding superannuation contribution rules is crucial for retirement savings, especially as there have been changes to the amounts that can be contributed annually and to the eligibility rules for making contributions.
In February 2024 the Average Weekly Ordinary Time Earnings (AWOTE) index was released, and a notable outcome from this was that superannuation contribution caps will increase from 1 July 2024. Understanding these changes could be important for those wishing to maximise their retirement income and tax efficiency.
Changes to superannuation contributions from 1 July 2024 include:
- The Concessional Super Contributions (CC) cap will increase from $27,500 to $30,000.
- The Non-Concessional Super Contributions (NCC) cap will increase from $110,000 to $120,000.
- The NCC cap under the bring-forward provisions will increase from $330,000 to $360,000.
The super contribution cap for the next two fiscal years can be summarised as follows:
| Type of Contribution |
2023/24 |
2024/25 |
| Concessional Super Contributions (CC) cap |
$27,500 |
$30,000 |
| Non-Concessional Super Contributions (NCC) cap |
$110,000 |
$120,000 |
Contribution planning
What taxable contributions can be made for the year ended 30 June 2024?
The Concessional Super Contributions cap is $27,500 per person for the 2023/24 year. Contributions in excess of this cap will be taxed at the individual’s marginal tax rate.
| Super tip:
If you receive employer super contributions in 2023/24, consider making voluntary super contributions to reach the $27,500 cap limit. The higher your income, the greater the tax savings. |
Concessional Super Contributions include:
- Superannuation Guarantee Contributions (SGC)
- Employer super contributions (e.g., salary sacrifice)
- Personal super contributions (claimed as a tax deduction in personal income tax return)
| Super tip:
There is no upper age limit for receiving Superannuation Guarantee Contributions (SGC). |
“Carry forward” provisions
Individuals with a Total Superannuation Balance (TSB) under $500,000 can carry forward unused concessional super contributions for up to 5 years, starting from the 2019/20 financial year. By taking advantage of these provisions, some individuals could achieve a higher superannuation balance and improved tax efficiency for their earnings.
| Super tip:
If your superannuation balance is below $500,000, assess if you have “carry forward” concessional super contributions that can be utilised before 30 June 2024. |
Work test
Individuals aged 67 to 74 must meet the work test to make member taxable (concessional) super contributions. The work test involves working 40 hours over a 30-day period at least once during the year.
Splitting contributions
Superannuation contributions made on behalf of an individual can be split with a spouse, which helps manage:
- Limits on starting an account-based pension
- Capacity to make Non-Concessional Super Contributions (NCC)
- Usage of the carry forward provisions with a member balance cap of $500,000
- Age differences between spouses for earlier benefit access
- Centrelink advantages by minimising a member’s account
- Ensuring sufficient superannuation to cover life insurance costs
Spouse rebate for superannuation contributions
A tax rebate of up to $540 is available for superannuation contributions made to a spouse earning less than $37,000 per year, if you contribute $3,000 into their superannuation for the year ended 30 June 2024.
| Super tip:
Spouse super contributions can be made by individuals under the age of 75 as of 1 July 2020. |
Tax-free contributions for the 2023/24 year
Non-Concessional Super Contributions (NCCs) are contributions where no tax deduction is claimed. The NCC cap is $110,000 for the 2023/24 year, rising to $120,000 for the 2024/25 year.
Members under 75 can contribute up to $330,000 over a 3-year period (depending on their Total Superannuation Balance) and this amount will increase to $360,000 from the 2024/25 year.
| Super tip:
It is essential to carefully review the super contribution cap rules before making a Non-Concessional Contribution. |
Downsizing contributions for those over age 55
Individuals aged 55 or older can make a downsizer contribution of up to $300,000 from the sale proceeds of their residential home. These contributions are tax-free and do not count towards the superannuation caps.
Personalised advice to maximise your super
At LDB, our dedicated Superannuation team excels in providing expert advice for individuals to stay compliant with the latest superannuation regulations and make the right contributions for optimal financial efficiency.
For everything from a superannuation calculator to forecast your financial future, to a comprehensive superannuation strategy that aligns with your objectives, including SMSF management, get in touch with LDB today.
Contact us by phone on (03) 9875 2900 or submit an enquiry through the contact form on this page to schedule a consultation.
