Starting the 1st of July 2024, Australians will welcome a boost in the amount we can contribute to our super accounts, both before and after tax. This change comes as a nod to the recent uptick in average earnings across the country, crossing a key threshold that calls for a higher cap on super contributions.
The Australian Superannuation system is designed with a checks and balances system, ensuring that as life gets more expensive and salaries rise, we can still set aside a healthy chunk for the golden years.
Viridian Advisory’s Executive Adviser Jason King sees this as a well-deserved pat on the back. “It’s a sign of reward that we’ve endured the high cost of living, which is positive…,” he says. Not to mention, the increase in wages means we’ll see our super guarantee contributions climb from 11% to 11.5%, opening up even more opportunities for tax deduction strategies, all aligning with the broader Tax Reforms – Stage 3 Tax Cuts, he commented.
There are three strategic implications to the superannuation structure, particularly concerning the bring-forward rule and adjusted thresholds for total superannuation balance (TSB):
Contribution Caps:
- The Concessional (pre-tax) contributions cap will increase from $27,500 to $30,000.
- The Non-Concessional (after-tax) contributions cap will increase from $110,000 to $120,000.
- Plus, under the bring-forward rule, you can now contribute up to $360,000, up from $330,000.
The Bring-forward Rule:
- The increase to the non-concessional contributions cap does not apply to those who have previously triggered the bring-forward rule in either this year (2023-24) or last year (2022-23) and are still in their bring-forward period.
- For those who have triggered the bring-forward rule, their cap remains at what it was when they triggered it, minus any contributions they’ve made since.
Total Superannuation Balance:
- Adjustments to the Total Superannuation Balance thresholds will impact who can use the bring-forward rule and for how long.
We encourage you to speak to a financial adviser to understand how these changes may affect your superannuation and retirement strategy.
