The 2024–25 financial year will bring some changes to Australia's superannuation landscape, including increases to Superannuation Contribution Caps and the Superannuation Guarantee (SG) percentage.
If you're serious about maximising your retirement savings and ensuring your future financial security, you should be excited for 1 July and here is why.
Superannuation Contribution Cap Increase
Starting in the 2024–25 financial year, the concessional and non-concessional contribution caps will both increase.
Concessional contributions, typically made before tax — including employer contributions and salary sacrifice arrangements — will have an annual cap of $30,000, up from the previous $27,500. This change allows you to make more deductible contributions to your superannuation, reducing your taxable income while boosting your retirement savings.
An extra $2,500 per year can go further than you think! If you're looking to boost your super by a lot with only a little, the upcoming cap increase allows you to.
For example, if a 30-year-old individual had a starting balance of $150,000 and made maximum concessional contributions over 30 years into their super (with a modest anticipated growth rate of 5% p.a.), that little bit extra could amount to approximately $166,097 more in their retirement fund.
Non-concessional contributions, made from after-tax income, will have an increased cap of $120,000 per year, up from $110,000. For those under 65, the bring-forward rule still applies, enabling you to make up to three years worth of non-concessional contributions in a single year, up to a maximum of $360,000.
These increased caps provide an excellent opportunity for high-income earners and those nearing retirement to accelerate their superannuation savings. By contributing more, you can take advantage of your superannuation fund's tax benefits and compound growth, ensuring a more comfortable and financially secure retirement.
Superannuation Guarantee Percentage Increase
The Superannuation Guarantee (SG) percentage, which mandates the minimum amount employers must contribute to their employee's super, will rise from 11% to 11.5%. This incremental increase is part of the government's ongoing plan to boost the SG rate to 12% by 1 July 2025.
For employees, this means a higher portion of your salary will be directed towards your superannuation fund without reducing your take-home pay. Employers need to adjust their payroll systems to accommodate this change, ensuring compliance and maintaining accurate contributions from 1 July 2024.
While half of a percentage increase might not sound like a lot, with the benefits of compounding in super, it can have a big impact in the long term!
Don't let the complexities of superannuation changes ruin your excitement for the upcoming increases — make the most of them. Our expert accounting advisors can help you make the most of your super contributions and retirement. Get in touch with us today for personalised advice.
Megan is an Associate in Cutcher & Neale’s Specialist Medical Services Division and has over 20 years of industry experience.
Megan is an expert in the taxation field, with a niche specialisation in advising medical professionals.
