Navigating Super Changes: New Financial Year, New Contribution Caps!
As we approach the new financial year, it’s crucial to stay informed about the changes that can impact your retirement savings. Starting from 1 July 2024, there will be significant updates to the Superannuation Guarantee (SG) rate and super contribution caps. Being aware of these changes can help you make more informed decisions and potentially enhance your financial future.
Super Guarantee (SG) Increase
If you’re employed in Australia and meet the eligibility requirements, your employer must contribute to your superannuation. This mandatory contribution is known as the Super Guarantee (SG). One of the significant changes taking effect from 1 July 2024 is an increase in the SG rate from 11% to 11.5%. This rate is set to continue rising until it reaches 12% on 1 July 2025.
Maximise Your Retirement Savings
To make the most of these changes, there are several strategies you can implement:
- Voluntary Contributions: Beyond the compulsory contributions made by your employer, you can also make voluntary contributions to your super. These contributions can be made on a before-tax (concessional) or after-tax (non-concessional) basis.
- Increase Your Contributions: The good news is that the super contribution limits are increasing from 1 July 2024, providing you with more opportunities to boost your super savings.
Understanding Contribution Caps
Here’s a summary of the new concessional and non-concessional contribution caps for the financial year 2024-25:
| Contribution Caps | 2023-2024 | 2024-2025 |
| Concessional Contributions Cap | $27,500 | $30,000 |
| Non-Concessional Contributions Cap | $110,000 | $120,000 |
| Bring forward Non-Concessional Cap | $330,000 over 3 financial years | $360,000 over 3 financial years |
Concessional (Before-Tax) Contributions Cap
Concessional contributions include the compulsory super contributions made by your employer, salary sacrifice arrangements, and personal contributions for which you claim a tax deduction. The cap on concessional contributions will increase from $27,500 to $30,000 for the financial year 2024-25. This increase means you can contribute more to your super without incurring additional tax.
Non-Concessional (After-Tax) Contributions Cap
From 1 July 2024, the cap for non-concessional contributions will rise from $110,000 to $120,000 per year. These contributions are made with after-tax money, such as savings or take-home pay. To be eligible to make non-concessional contributions, you must be under 75 years old and have a total super balance of less than $1.9 million as of the previous 30 June.
Staying updated with these changes can significantly impact your retirement planning. By understanding and leveraging the increased SG rates and contribution caps, you can take proactive steps to enhance your super savings and secure a more comfortable retirement. If you have any questions or want to understand how you or your business will navigate these changes, we suggest that you contact one of our Financial Advisers today.
The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication. We encourage you to speak to one of our Registered Tax Agents or Financial Advisers today.
