What you need to know
As we approach the new financial year, it’s important you are aware of the upcoming changes of superannuation contribution caps and thresholds. These adjustments may impact your retirement planning strategy, particularly concerning non-concessional (after tax) contributions (NCCs).
Key changes from 1 July 2024
Increased concessional and non-concessional caps:
- The annual concessional contributions cap will increase to $30,000.
- Correspondingly, the non-concessional cap will increase to $120,000.
- The bring-forward provision, which allows up to three years’ worth of non-concessional contributions in a single year, will increase to $360,000.
Impact of Total Super Balance (TSB) on bring-forward provisions
While these increased caps provide a greater opportunity for boosting your superannuation, it’s crucial to be aware of how your Total Super Balance (TSB) affects your eligibility for these contributions. The key thresholds for the 2024/25 financial year are as follows:
- To utilise the full three-year bring-forward amount $360,000, your TSB must be below $1.66 million as of 30 June 2024.
- For the two-year bring-forward amount of $240,000, your TSB must be below $1.78 million.
Interestingly, these thresholds are slightly lower than the current financial year as they are linked to the transfer balance cap of $1.9 million (the lifetime limit on the amount you can transfer into retirement phase accounts) which will not increase at 1 July 2024.
Why does this matter?
With financial markets delivering positive returns together with any work related or personal concessional contributions, many will find their total TSB will be a lot higher than at 30 June 2023. Any NCCs before 30 June 2024 might unintentionally lift their TSB above either the $1.66 million or $1.78 million threshold limiting the ability to maximise non-concessional contributions under the bring-forward provisions next year.
What can you do?
- Check your current super balance and project where it might be by 30 June 2024.
- If you’re planning substantial non-concessional contributions, consider the timing and whether it may be better to reduce or defer them this year to allow utilisation of the bring forward provisions next financial year.
- Or in some circumstances, it may be better to use the bring forward provisions in this financial year which are based on your TSB at 30 June 2023 which might be a lot lower.
- Seek advice!
Be careful
These rules are complex and individual circumstances vary. We recommend you seek personal advice. Please reach out if we can help.
Phone 03 8610 6396
Email: info@keepwp.com.au
Keep Wealth Partners Pty Ltd (AFSL 494858)
This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from a financial planner who can consider if the strategies and products are right for you.
