2024 Superannuation Changes - Super Contribution Cap Increased

Thursday, July 18, 2024

From July 1st, 2024, Australians saw an increase in superannuation contribution caps, offering new opportunities for those planning for retirement to boost their savings. These changes, along with adjustments to the bring-forward rule, provide more flexibility for individuals to grow their superannuation balances.

The concessional (before-tax) contribution cap increased from $27,500 to $30,000 per year. This means you can contribute more money to your super from your pre-tax income, potentially reducing your taxable income while growing your retirement savings. This cap includes employer contributions, salary sacrifice arrangements, and personal contributions for which you claim a tax deduction.

For non-concessional (after-tax) contributions, the annual cap rose from $110,000 to $120,000. This allows you to put more of your after-tax money into super, which can be beneficial if you've received a windfall or want to boost your savings from other sources.

The bring-forward rule, which allows eligible individuals to make larger non-concessional contributions, also saw changes. Under this rule, you may be able to contribute up to three years' worth of non-concessional contributions in a single year. With the new caps, the maximum bring-forward amount will increase from $330,000 to $360,000.

These changes offer several benefits for those considering retirement:

Increased savings potential: Higher caps mean you can contribute more to your super, potentially leading to a larger retirement nest egg.
Tax advantages: Concessional contributions are taxed at a lower rate in your super fund compared to your marginal tax rate.
Flexibility: The bring-forward rule allows you to take advantage of good financial years or windfalls to significantly boost your super.

The money for these increased contributions can come from various sources:

Salary sacrifice arrangements with your employer
Personal savings or investments
Inheritance or other windfalls
Proceeds from selling assets
Business income for self-employed individuals

In addition, the Superannuation Guarantee (SG), which is the minimum amount employers must contribute to their employees' super accounts, increased from 11% to 11.5%. This increase means more money will be going into workers' retirement savings.

For those nearing retirement or considering their financial future, this boost in super contributions can have significant benefits:

Larger retirement nest egg: more money being added to your super account over time.
Power of compound interest: potential for compound interest to work its magic.
Tax advantages: Super contributions are generally taxed at a lower rate than regular income

It's important to remember that while these changes offer new opportunities, they also come with complexities. The interaction between contribution caps, your total superannuation balance, and the general transfer balance cap (which remains unchanged at $1.9 million) can be complicated.

Given these complexities, it's advisable to consult with a financial advisor to ensure you're making the most of these new limits and rules based on your individual circumstances and retirement goals.

For more Information contact Mark Digby at Maher Digby Securities Pty Ltd - Financial Advisers – AFSL No. 230559. This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such. Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial advisor.