Changes to super contributions from 1 July 2024

It was recently announced that the concessional and non-concessional contributions caps for superannuation will increase from 1 July 2024.  

These changes are the result of the recent wage rises we’ve seen here in Australia, with the average weekly ordinary time earnings (AWOTE) figure on November 23 for full-time adults recorded at $1,888.80 (ABS).

Here, we take a look at super contributions and share what the increase will be. We’ll also give you some pointers on how to use this knowledge. 

Super contribution cap recap

First, let’s have a quick recap on super contribution caps. 

Super contribution caps are limits set by the government on the amount of money you can contribute to your super fund each financial year.

These caps are in place to: 

• Ensure that super remains a tax-effective way to save for retirement by limiting the amount of tax concessions individuals can receive.
• Prevents individuals from using superannuation as a tax avoidance strategy by making large, lump-sum contributions shortly before retirement.
• Ensures super is used primarily for retirement savings rather than as a tax-minimisation tool.

There are two main types of contribution caps:

• Standard concessional contribution cap (before tax) – This includes employer contributions (such as superannuation guarantee contributions and salary sacrifice contributions) plus personal contributions claimed as a tax deduction.
• Non-concessional contribution cap (after-tax) – This includes personal contributions not claimed as a tax deduction. 

Why super contributions caps change

Raising the superannuation contributions caps in line with earnings is done for several reasons: 

• Ensures an adequate standard of living in retirement – By allowing us to save more in our superannuation funds.
• Maintains fairness – By ensuring those with higher incomes aren’t able to save a larger portion of their incomes. 
• Encourages retirement saving – This can reduce reliance on the Age Pension and other forms of government support.

So, what is the cap increase?

As of 1 July 2024:

The standard concessional contributions cap will increase from $27,500 to $30,000 (for individuals of all ages)

The non-concessional contributions cap (which is 4x the standard concessional contribution cap) will increase from $110,000 to $120,000. 

This also means that the maximum available under the non-concessional contribution bring-forward provisions (for individuals under 67 years of age) will increase from $330,000 to $360,000. 

The total superannuation balances threshold for non-concessional contributions remains at $1.9 million, as does the transfer balance cap, also set at $1.9 million. 

Make the most of the increase

Why is knowing about this increase important? 

Well, firstly, it’s a push to make sure you take advantage of these higher super contribution limits to boost your superannuation fund retirement nest egg. 

Secondly, being aware of the new caps can also help you make more informed decisions about your contributions to minimise tax liabilities and maximise benefits. 

Finally, it can help you avoid exceeding the caps, which can result in additional tax and penalties. 

If you’d like to understand how you can extract value from these superannuation changes, reach out to your Maxim Advisor or contact our team to have a chat.