Information for advisers only.
A range of changes to superannuation came into effect on 1 July 2024.
Increased general concessional contribution cap and change in rolling five-year carry forward concessional contributions
Concessional contributions include superannuation guarantee, salary sacrifice and personal contributions which are claimed as a tax deduction. Unless the concessional carry forward applies, a client’s concessional contributions are limited to a standard concessional cap of $30,000 (2024/25) which has increased from $27,500.
From 1 July 2024, clients who are eligible1 to utilise carry forward concessional contributions will have a 2024/25 concessional cap of up to $162,5002 minus all concessional contributions they have received within the relevant concessional caps3 since 1 July 2019.
Any unused concessional contribution cap from the 2018/19 financial year is no longer relevant to calculate the carried forward amount as this is outside the five-year rolling financial year period.
Example 1:
Adrian (age 57) satisfies the criteria to utilise carry forward concessional contributions including having a total superannuation balance (TSB) of <$500,000 as at 30 June 2024.
During 2024/25 he will earn taxable income of $150,000 as a sole trader.
Since 1 July 2019, Adrian has received the following concessional contributions:
- 2019/20 - $20,000
- 2020/21 - $15,000
- 2021/22 - $24,000
- 2022/23 - $18,000
- 2023/24 - $22,000
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Adrian’s 2024/25 concessional cap is $63,500. This consists of the $30,000 standard concessional cap for 2024/25, plus $5,000 (2019/20 unused amount), plus $10,000 (2020/21 unused amount), plus $3,500 (2021/22) unused amount), plus $9,500 (2022/23 unused amount), plus $5,500 (2023/24 unused amount).
Advice impacts:
- Concessional contribution history relevant to clients able to access the carry forward measure will be from 1 July 2019. The 2018/19 financial year is no longer relevant. Identifying the applicable years and caps will be essential to determining a client’s maximum concessional cap.
Increase to the standard non-concessional and bring-forward amounts
Non-concessional contributions include personal contributions made from after-tax income or savings which will not be claimed as a tax deduction. Unless the non-concessional bring-forward applies, a client’s non-concessional contributions are limited to a standard concessional cap of $120,000 (2024/25) which has increased from $110,000. The standard non-concessional cap is four times the standard concessional cap.
From 1 July 2024, there are four eligibility criteria to trigger the non-concessional bring forward during 2024/25:
- The client is age 74 or younger as at 1 July 2024.
- The client did not trigger the non-concessional bring forward by receiving non-concessional contributions of more than the standard non-concessional cap during either 2022/23 or 2023/24 ($110,000).
- If the client has attained age 75 during 2024/25 i.e. they were 74 as at 1 July 2024, the contribution must occur within 28 days from the end of the month they attained age 75.
- They satisfy the total superannuation balance criterion as illustrated by the table below.
| Total superannuation balance as at 30 June 2024 |
Maximum 2024/25 non-concessional contribution |
|---|---|
| <$1,660,000 |
$360,000 (three year bring forward) |
| $1,660,000 - $1,779,999 |
$240,000 (two year bring forward) |
| $1,780,000 - $1,899,999 |
$120,000 |
| $1,900,000+ |
Nil |
Advice impacts:
- The increased non-concessional cap and bring forwards can be utilised presents an opportunity for clients aged 67-74 to:
- Contribute non-superannuation funds to their superannuation and (subject to the transfer balance cap) subsequently commence an account based pension (example 2), and/or
- Perform a recontribution strategy for estate planning purposes (example 3)
Example 2:
Paul (age 68) retired several years ago, had a total superannuation balance as at 30 June 2024 of $1,695,000, and did not receive any non-concessional contribution during 2022/23 or 2023/24.
During 2024/25 Paul sells an investment property and receives proceeds of $1,000,000. After the 50% CGT discount, the assessable capital gain from the sale is $200,000.
Paul can receive non-concessional contributions of up to $240,000 during 2024/25. He cannot receive the full $360,000 due to the total superannuation balance eligibility criterion.
Paul is unable to offset the capital gain via a personal contribution claimed as a tax deduction. This is because Paul is not eligible to receive this type of contribution, as he does not satisfy the work test or work test exemption.
Example 3:
Susan (age 70) retired several years ago. She has an account based pension with a 30 June 2024 value of $700,000 (100% taxable component) and minimal funds outside superannuation.
In the event of her death, Susan’s account based pension will be paid by her superannuation fund as a lump sum death benefit to her non-dependant adult daughter Michelle.
Susan can withdraw (as a lump sum) $360,000 from her account based pension, recontribute this amount as a non-concessional contribution and commence another account based pension with these newly contributed funds.
By performing the withdrawal recontribution strategy, Susan has increased the tax-free component of her superannuation by $360,000. In the event of Susan’s death, this strategy will (based on the current balance) save Michelle up to $61,200 ($360,000 x 17%) in death benefits tax.
Increase to the superannuation guarantee (SG) rate
The SG rate is the minimum percentage of an employed client’s ordinary time earnings their employer must pay to their superannuation. There is also an upper limit of earnings per quarter for which an employer has to pay SG, known as the maximum super contribution base.
The 2024/25 SG rate has increased to 11.5% (from 11% in 2023/24).
Based on current legislation the SG rate will increase to 12% from 2025/26, with no further legislated increases.
Advice impacts:
- Employed clients will receive a higher amount of SG for 2024/25 than 2023/24 for the same amount of ordinary time earnings.
- Clients who receive voluntary concessional contributions should take the increased SG rate into account when calculating the amount of their concessional cap available for voluntary concessional contributions.
Low rate cap no longer relevant for withdrawals from 1 July 2024
The low rate cap can apply to withdrawals made by clients between their preservation age and age 60. Where it could be used, the low rate cap applied a concessional rate of tax on lump sum withdrawals sourced from taxable components within this lifetime cap.
Since 1 July 2024, clients who have not yet reached their preservation age would have a preservation age of age 60. These clients will have a date of birth from 1 July 1964. Clients who have already attained their preservation age before 1 July 2024 will already be over the age of 60. This means it is not possible for clients to be over their preservation age without also being age 60 or over. Therefore, from 1 July 2024, the low rate cap is no longer relevant.
Other superannuation changes
On 1 July 2024, various other superannuation caps and thresholds have been indexed as summarised in the table below.
| Cap/Threshold | 2023/24 | 2024/25 |
|---|---|---|
| Standard concessional cap | $27,500 | $30,000 |
| Standard non-concessional cap | $110,000 | $120,000 |
| Non-concessional cap based on total superannuation balance (TSB) eligibility criterion | If TSB as 30 June of then previous financial year is: • <$1,680,000 – then $330,000 • Between $1,680,000 and $1,789,999 – then $220,000 • Between $1,790,000 and $1,899,999 – then $110,000 • >$1,900,000 – then nil |
If TSB as 30 June of then previous financial year is: • <1,660,000 – then $360,000 • Between $1,660,000 and $1,779,999 – then $240,000 • Between $1,780,000 and $1,899,999 – then $120,000 • >$1,900,000 – then nil |
| Small business CGT cap (15-year exemption) | $1,705,000 | $1,780,000 |
| Low rate cap amount (lump sum withdrawals between preservation age and age 60) |
$235,000 | No longer relevant (see section 4. ‘Low rate cap no longer relevant for withdrawals from 1 July 2024’ above) |
| Untaxed cap amount | $1,705,000 | $1,780,000 |
| Maximum contribution/earnings base (for Superannuation guarantee) | $62,270 | $65,070 |
| Co-contribution income thresholds | Lower: $43,445 Upper: $58,445 |
Lower: $45,400 Upper: $60,400 |
The following superannuation caps and thresholds have not been indexed and are the same for 2023/24 and 2024/25.
| Cap/Threshold | 2023/24 and 2024/25 |
|---|---|
| Maximum downsizer contribution | Lesser of $300,000 and the amount of the eligible sale proceeds |
| Small business CGT retirement exemption | Lesser of $500,000 and the disregarded gain |
| Disregarded small fund assets (relevant for certain SMSF administrative matters) | TSB <$1,600,000 (as at 30 June of the previous financial year) |
| Eligibility to use carry forward concessional contributions | TSB <$500,000 (as at 30 June of the previous financial year) |
| Eligibility to use the work test exemption | TSB <$300,000 (as at 30 June of the previous financial year) |
| Spouse contribution tax offset | Lower income threshold: $37,000 Upper income threshold: $40,000 |
| Low income super tax offset | $37,000 |
| Division 293 (additional 15% tax applied to concessional contributions) | $250,000 |
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Insurance within super: realising benefits and avoiding pitfalls
1. To be eligible to receive carry forward concessional contribution, a client must:
- Have a total superannuation balance of <$500,000 as at 30 June of the previous financial year.
- If via a personal contributions claimed as a tax deduction, the client is under age 67 or age 67-75 and satisfies the work test or work test exemption.
- Follow the usual process and timeframes if using the carry forward via making personal contributions which are claimed as a tax deduction and generate sufficient taxable income to offset the deduction.
2. The standard concessional cap for 2019/20 and 2020/21 was $25,000, for 2021/22, 2022/23 and 2023/24 was $27,500, and for 2024/25 is $30,000. [($25,000 x 2) + ($27,500 x 3) + $30,000] = $162,500.
3. If previous concessional contributions have exceeded the client’s personal concessional cap, for this purpose the amount of the excess concessional contributions are disregarded.
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