Superannuation Contribution Cap increases – changes announced

Superannuation Contribution Cap increases – changes announced
On the 22nd February 2024, the Federal Government announced that for the first time in 3 years, there will be an increase in the standard concessional and non-concessional superannuation contribution caps.

This increase is a result of the increase in wages growth data (Average Weekly Ordinary Time Earnings - AWOTE) by the Australian Bureau of Statistics and while expected, is a welcomed announcement alongside Stage 3 Tax Cuts, meaning that all Australians may have additional disposable income to enable them to contribute more into Super.

​From 1 July 2024, the annual concessional and non-concessional caps will increase as follows:

• Concessional Contribution Cap will rise from $27,500 to $30,000 per annum; and
• Non-Concessional contribution Cap will rise from $110,000 to $120,000 per annum.

Your concessional contributions will include compulsory super payments from employers, pre-tax salary sacrifice and personal voluntary contributions that you then claim as a tax deduction. These contributions are taxed at only 15 per cent in your Super Fund – significantly less than the marginal tax rates most individuals pay.

Non-concessional contributions are often made “out of pocket” or “post-tax” from the proceeds of the sale of investments, property or from an inheritance. These contributions are not taxed in your Super Fund. The ability to utilise the “bring-forward” rule for non-concessional contributions becomes more attractive – this rule allows you to make up to three years’ worth of non-concessional contributions can be made in one year.

You may also be able to utilise the carry-forward concessional cap if your Super balance is under $500,000.

The increase in both caps provide you with greater flexibility in making decisions to contribute to your Superannuation, however it is important to be aware of how much you have contributed to Super (and whether it is concessional or non-concessional) each year, as there are significant tax penalties if you exceed these caps.

If you are looking to take advantage of such changes, please feel free to contact Hansens on 03 8805 8000 to discuss your individual circumstances.