For the first time in three years, superannuation contributions are set to increase from 1 July 2024. These changes will affect both concessional and non-concessional contributions, including the maximum caps for non-concessional contributions under the bring forward rules. Let’s take a closer look at how these changes will impact your superannuation savings.
Contribution caps increase
Due to indexation, the contribution caps will increase on 1 July 2024 as follows:
- Concessional contributions cap – from $27,000 to $30,000:
Concessional contributions (CC) are before-tax contributions and are generally taxed at 15%. This includes superannuation guarantee (SG) payments made by your employer on your behalf, as well as salary sacrifice contributions and tax-deductible personal contributions. The current annual CC cap is $27,500 in 2023/24.
- Non-concessional contributions cap – from $110,000 to $120,000:
Non-concessional contributions (NCC) are voluntary contributions made from after-tax dollars. These are contributions you choose to make using funds from your bank account or other savings. Currently, the annual NCC cap is $110,000 in 2023/24.
- Maximum non-concessional contributions cap under the bring forward rules – from $330,000 to $360,000:
The bring forward rules allow eligible individuals to make up to three years of non-concessional contributions in a single financial year. This means you can contribute up to three times the annual NCC cap, which previously was $110,000. With the increase, you may be able to top up your superannuation by $360,000 within the same financial year.
TSB Thresholds for bring forward rules
To determine how much you can contribute under the bring forward rules, your total superannuation balance (TSB) as of 30 June of the previous financial year comes into play.
Important considerations
- Bring forward rules and prior triggers:
The increase to the NCC cap under the bring forward rules will not apply to individuals who have already triggered the bring forward rule in either the current year (2023/24) or the previous year (2022/23) and are still in their bring forward period. The NCC cap that applies to an individual is calculated based on the standard NCC cap when they triggered the bring forward rule in their first year.
- Plan your contributions wisely:
If you want to maximise your non-concessional contributions using the bring forward rule, it is advisable to consider restricting your contributions this year to $110,000 or less. By doing so, you can avoid triggering the bring forward rule this year and take advantage of the increased NCC cap in subsequent years.
- Complex rules and excess tax:
It is crucial to be mindful of your age, TSB, and other eligibility criteria when planning your contributions. Exceeding the contribution caps can result in excess tax. Consider seeking professional advice or consulting with your superannuation provider to ensure compliance with the rules.
The following table shows the TSB Thresholds that apply:
Conclusion
The upcoming increase in superannuation contribution caps presents an opportunity for individuals to boost their retirement savings. With the higher caps for both concessional and non-concessional contributions, it is essential to understand the rules and make informed decisions regarding your superannuation strategy.
Regency Partners, as your trusted financial advisors, can provide guidance and support in navigating these changes and maximising the benefits for your retirement planning. Take advantage of these changes and plan your contributions wisely with the assistance of our expert team to help secure a financially secure retirement.
Note: The information provided in this article is based on the current regulations and caps as of the time of writing. It’s always recommended to consult with a financial advisor or superannuation specialist for personalised advice based on your individual circumstances.
