The Australian Tax Office (ATO) confirmed this month that the superannuation thresholds for 2024 will increase. These adjustments equate to nearly a 10% rise in the allowable super contributions. The raised thresholds also benefit low-income earners by increasing the earnings limit for qualifying for the $500 co-contribution payment.
Superannuation contribution caps increase in increments of $2,500, tied to average weekly ordinary time earnings. Starting 1st July, the concessional contribution cap will climb to $30,000 per individual, up from the current limit of $27,500.
Concessional contributions encompass contributions eligible for tax concessions, this is typically due to them being tax deductible. It includes voluntary personal contributions with claimed tax deductions and extends to salary-sacrificed arrangements where pre-tax income is directed to superannuation.
Compulsory employer super guarantee payments of 11% are also considered concessional contributions, rising to 11.5% on the 1st July. This increase will also impact the carry-forward provisions, allowing individuals to utilise unused concessional contribution caps from the previous five years. To qualify for the carry-forward provisions, your total superannuation balance must be under $500,000 at 30 June of the previous financial year and other eligibility criteria such as age and work status must be met for those over 67.
From 1 July, under the carry-forward rules, individuals can utilise the new concessional cap of $30,000 along with three years of $27,500 and one year at $25,000, totaling $137,500 (excluding previously used amounts).
Concessional contributions incur a 15% contributions tax, doubling to 30% if adjusted taxable income exceeds $250,000 under “Division 293 tax.” This tax is typically deducted from the super fund as per the member’s instructions.
The non-concessional contribution cap will increase to $120,000 from 1 July, up from the current $110,000. To be eligible to make non-concessional contributions, your total super balance must be less than $1.9 million. Non-concessional contributions are those without tax deductions claimed and are not subject to contributions tax, meaning the full amount contributed is invested. If your total super balance is under $1.9 million, there is an opportunity to bring-forward contribution caps as detailed below:
| Total Super Balance (at 30 June 2024) | Bring Forward Rules |
|---|---|
| Under $1.66 million | $360,000 |
| $1.66 to less than $1.78 million | $240,000 |
| $1.78 to less than $1.9 million | $120,000 |
| $1.9 million and above | No bring forward |
Should you require further expert advice in relation to super contributions and your obligations as an employer we encourage you to engage with an advisor.