1 July 2024 marked an important date for changes to superannuation (commonly referred to as super) rates and rules, including the increase to the Superannuation Guarantee (SG) rate and super contribution caps.
As an employer, it is crucial to stay informed about these changes and take any necessary steps to ensure compliance with superannuation guarantee obligations for your employees.
Additionally, staying informed about these changes can help when making informed decisions about your retirement savings.
Key Changes
- Effective from 1 July 2024, the SG rate will rise from 11% to 11.5%
- The cap on concessional (before-tax) super contributions will increase from $27,500 to $30,000 per year
- The non-concessional (after-tax) super contributions cap will also increase from $110,000 to $120,000 from the 2024-25 financial year
Superannuation Guarantee (SG) Rate Rise, for Employers
If you employ staff in Australia, who meet eligibility requirements, you must pay super contributions on their behalf. These contributions, known as the Superannuation Guarantee (SG), are paid in addition to an annual salary.
One of the significant changes taking effect from 1 July 2024 is an increase in the SG rate from 11% to 11.5%. This rate will continue to rise, reaching 12% on 1 July 2025.
Changes to Super Contributions Caps
There are various strategies you can employ to enhance your retirement savings, such as contributing extra money to your super while you’re still working.
In addition to the compulsory employer contributions, you can make voluntary contributions to your superannuation. These contributions can be either before-tax (concessional) or after-tax (non-concessional).
The good news is that from 1 July 2024, the super contribution limits will be increasing. This provides you with greater opportunities to boost your super savings and secure more funds for your retirement.
The concessional and non-concessional contribution caps are summarised below:
Concessional (before-tax) Contributions Cap
Concessional contributions encompass the mandatory super contributions made by an employer, salary sacrifice amounts, and any personal contributions you claim as a tax deduction.
There is a limit on concessional super contributions, which is the maximum amount you can contribute to your superannuation without incurring a higher tax rate.
The concessional contributions cap will rise from $27,500 to $30,000 for the 2024-25 financial year
Carry Forward Concessional Contributions
If you’ve taken time off work to raise children or for other lifestyle reasons, or if you haven’t had the funds to increase your super until now, you can utilise carry-forward concessional contributions (also known as catch-up contributions).
To qualify for catch-up contributions, your total super balance must have been below $500,000 as of 30 June of the last financial year.
If you’re eligible, your concessional contribution cap for the financial year includes the annual cap plus any unused concessional contribution caps from the previous five financial years. Catch-up contributions allow you to compensate for past years where you may not have fully used your concessional contributions cap.
If your income has increased for the financial year, using catch-up contributions can help you claim a larger tax deduction.
Non-Concessional (after tax) Contributions Cap
Starting from 1 July 2024, you may be able to boost your super by making personal, after-tax contributions, with the cap increasing from $110,000 to $120,000 per year.
These additional contributions can be made with your after-tax money, including funds from your savings or take-home pay.
To be eligible to make after-tax contributions, you must be under 75 years old, and your total super balance as of 30 June of the previous financial year must be less than $1.9 million.
Non-Concessional Contributions Bring Forward Rule
This rule pertains to after-tax super contributions and may allow you to contribute more to your super by bringing forward up to two years’ worth of after-tax contributions in addition to the annual cap.
Your total super balance at the end of 30 June of the previous financial year will determine your eligibility to make non-concessional contributions and whether you have triggered the bring-forward rule in the past two financial years. Your total super balance also dictates the maximum amount you can contribute.
For instance, in the 2024-25 financial year, if your total super balance is less than $1.66 million as of 30 June 2024, and you did not use the bring-forward rule in the previous two financial years (2022-23 and 2023-24), you may be able to contribute up to $360,000 in 2024-25, which is three times the annual cap, using the bring-forward rule.
If your total super balance is between $1.66 million and $1.78 million, you can contribute up to $240,000. If your total super balance is between $1.78 million and $1.9 million, the maximum you can contribute is $120,000.
Who Can Help?
If you are unsure about how the upcoming superannuation changes may affect your business, or for advice regarding other superannuation or payroll matters, contact the team of accountants and tax lawyers at The Quinn Group by calling us on 1300 QUINNS (1300 784 667), or on +61 2 9223 9166, or by submitting an online enquiry form to schedule an appointment.
