Changes to Superannuation Contributions

by Monica Wang

As we approach 30 June 2024, there are several important changes effective from 1 July 2024, and tasks to be completed by you before 30 June 2024. Here’s a detailed breakdown to help you understand these updates:

1. Indexed Contribution Caps on 1 July 2024

• Concessional Contribution Cap: This is the limit for before-tax contributions, such as employer contributions or voluntary concessional contributions where you can claim a tax deduction in your tax return. The annual cap increases to $30,000. If you are over 66 years old, you must meet the work test* to be able to make a voluntary concessional contribution.
• Non-Concessional Contribution Cap: This is the limit for after-tax contributions. The annual cap increases to $120,000. You are eligible to make a non-concessional contribution if you are under 75 and have a Total Super Balance of under $1.9 million.
• Three-Year Bring-Forward Non-Concessional Contribution Limit: You can bring forward three years’ worth of non-concessional contributions of up to $360,000 from 1 July 2024, if you are under 75 years old and have a Total Super Balance under $1.66 million at the previous year’s end.  Please note, if you have already used this arrangement in FY2023 or FY2024, you are not eligible to use it in FY2025.

Note: *Work Test: For those aged 67-74, a work test (proving you worked at least 40 hours within 30 consecutive days in the financial year) must be met for voluntary concessional contributions.

2. Transfer Balance Cap and Total Super Balance Cap

• Transfer Balance Cap: This cap limits the total amount of super you can transfer into a tax-free retirement phase account, such as a pension account. It remains at $1.9 million from 1 July 2024.
• Total Super Balance Cap: This cap represents the total amount of superannuation savings you have across all your superannuation accounts. It includes amounts in both accumulation and retirement phase accounts. The Total Super Balance Cap affects your eligibility to make non-concessional (after-tax) contributions. If your Total Super Balance is at or above $1.9 million, you cannot make any non-concessional (after-tax) contributions.

Note: These caps were introduced on 1 July 2017. You can get your personal Transfer Balance and Total Super Balance records from your income tax account through your tax agent or your MyGov account.

Three-Year Bring-Forward Contribution Eligibility:

• Before 1 July 2024: To be eligible to use the three-year bring-forward rule (contributing up to $330,000 over three years), your Total Super Balance must be under $1.68 million as of the previous financial year-end.
• From 1 July 2024: To be eligible to use the three-year bring-forward rule (contributing up to $360,000 over three years), your Total Super Balance must be under $1.66 million as of the previous financial year-end.

3. Superannuation Guarantee Contribution (SGC) Increase

• The mandatory employer contribution rate will rise from 11% to 11.5% starting 1 July 2024.

4. Use It or Lose It: Unused 2018/2019 Carry-Forward Concessional Contribution

• If your Total Super Balance on 30 June 2023 is under $500,000 and you have unused concessional contribution cap space from the 2018/2019 financial year, you have until 30 June 2024 to use this additional contribution cap above the normal annual cap of $27,500.

Note: For those aged 67-74, the work test requirement applies. You can get your unused 2018/2019 carry-forward concessional contribution balance from your tax agent or your MyGov account.

5. 2023/2024 Minimum Pension Drawdown

• Ensure you meet the minimum pension drawdowns before 30 June 2024. This is a mandatory amount that must be withdrawn each year if you are in the pension phase.

We’re Here to Help

At Moneta Super, we are dedicated to helping you navigate these changes. If you have any questions or need assistance, please do not hesitate to contact us.

Important: The above information is for informational purposes only. Moneta Super does not provide personal or financial advice. Please consult your adviser for tailored guidance.