A brief guide to the new rules and how they affect you.
Introduction
Superannuation is one of the most important ways to save for your retirement. But the rules and regulations around it can be confusing and change frequently. That’s why we’ve prepared this article to help you understand the latest changes that took effect from 1 July 2024 and how they impact your superannuation account.
Changes to the Superannuation Guarantee Rate
The superannuation guarantee (SG) is the minimum amount of superannuation that your employer must pay into your account on your behalf. The SG rate has been gradually increasing over the years, and in 2024 it reached 12% of your ordinary time earnings. This means that if you earn $100,000 a year, your employer must contribute $12,000 to your superannuation account. This is good news for your retirement savings, as it means more money will be invested and compounded over time.
Changes to the Concessional Contributions Cap
Concessional contributions are the amounts that you or your employer contribute to your Superannuation account before tax. These include the SG, salary sacrifice, and personal deductible contributions. Concessional contributions are taxed at a lower rate of 15% (or 30% for high-income earners) than your marginal tax rate, which can be up to 47%. The concessional contributions cap is the limit on how much you can contribute to your superannuation account before tax each year.
In 2024, the Concessional contributions cap increased from $27,500 to $30,000 for everyone, regardless of your age. This means that you can contribute more to your superannuation account before tax and reduce your taxable income.
Changes to the Non-Concessional Contributions Cap
Non-Concessional contributions are the amounts that you contribute to your superannuation account after tax. These include personal after-tax contributions and spouse contributions. Non-concessional contributions are not taxed when they enter your superannuation account, but they are subject to a cap. The Non-Concessional contributions cap is the limit on how much you can contribute to your superannuation account after tax each year.
In 2024, the non-concessional contributions cap increased from $110,000 to $120,000 for everyone, regardless of your age. This means that you can contribute more to your superannuation account after tax and boost your retirement savings.
Contribution Age Changes – 2022
From 2022 the age-based restrictions for making personal, non-concessional superannuation contributions were lifted from age 67 to age 75. This has been a positive change enabling contributions to be made longer and later. Practically, it has enabled clients to put more of their investment assets into a low tax environment. These assets may have previously been caught outside of superannuation due to previous restrictions. Or in some cases have been recently received as a result of property sales or estate proceeds.
Summary
The Superannuation changes in 2024 are designed to help you save more for your retirement and benefit from the tax advantages of superannuation. However, superannuation can be complex and there may be other factors that affect your situation. That’s why we recommend that you seek professional advice from a qualified financial adviser before making any decisions about your superannuation. If you have any questions or need assistance, please contact the team at Kelly Wealth Services. We are here to help you achieve your financial goals.
