Key Superannuation Changes for 2024/25 Financial Year

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As we approach the new financial year, several important changes to Australia’s superannuation system are set to take effect. Some of these changes are already legislated, while others are still proposals. Here’s a comprehensive overview of the key changes:

Superannuation Guarantee Increase

From July 1, 2024, the Superannuation Guarantee (SG) rate will increase from 11% to 11.5%. This means employers will be required to contribute a higher percentage of an employee’s ordinary time earnings to their superannuation fund. The SG rate is legislated to further increase to 12% on July 1, 2025.

Contribution Cap Increases

Concessional Contributions

The annual cap for concessional (before-tax) contributions will rise from $27,500 to $30,000 on July 1, 2024. This increase provides an opportunity for individuals to boost their retirement savings through tax-effective contributions.

Non-Concessional Contributions

The annual cap for non-concessional (after-tax) contributions will increase from $110,000 to $120,000 per financial year. This change allows individuals to contribute more of their after-tax income to their superannuation, subject to their total super balance.

Bring-Forward Rule Adjustment

With the increase in the non-concessional contributions cap, the bring-forward rule will also change. Eligible individuals may be able to contribute up to $360,000 in a single financial year, effectively bringing forward three years’ worth of non-concessional contributions.

Bonus: One-page fact sheet

For a handy summary of the key information, download our one-page Superannuation 2024/25 Fact Sheet. It contains a concise overview of the key points discussed above and more.

Proposed Changes (Not Yet Law)

It’s important to note that the following changes were proposed in the May 2024 Federal Budget but have not yet been legislated:

Superannuation on Paid Parental Leave

From July 1, 2025, the government proposes to introduce superannuation payments on the Commonwealth’s Parental Leave Pay scheme. This measure aims to help close the gender super gap and is expected to benefit approximately 180,000 parents each year.

Changes to Concessional Tax Rates for High Balances

From July 1, 2025, the government proposes to increase the concessional tax rate applied to future earnings for balances above $3 million from 15% to 30%. This adjustment is expected to affect around 80,000 people in the 2025/26 financial year.

Deeming Rate Freeze Extension

The existing freeze on deeming rates at 2.25% has been proposed to be extended until June 30, 2025. This measure would provide relief to retirees and allow them to benefit from increases in interest rates without impacting age pension rates or eligibility.

Payday Super

From July 1, 2026, the government proposes to require employers to pay their employees’ super at the same time as their salary and wages. This change aims to address the issue of unpaid super and make it easier for workers to track their payments.

Conclusion

These superannuation changes for the 2024/25 financial year offer opportunities for Australians to enhance their retirement savings. The increases in contribution caps and the Superannuation Guarantee rate are legislated and takes effect from July 1, 2024. However, it’s important to remember that the proposed changes regarding paid parental leave, high balance tax rates, deeming rate freeze, and payday super are not yet law and may be subject to change.

As always, it’s advisable to consult with a financial adviser to understand how these changes may affect your individual circumstances and retirement planning strategies.

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