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Practitioners have been reminded about the increase in contribution caps as well as other changes impacting employers.
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HLB Mann Judd flags super changes for new financial year
27 May 2024
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In a recent article, HLB Mann Judd partner of business advisory services, Eric Maillard, said with the new financial year soon approaching, practitioners should ensure clients are aware of some of the superannuation changes applying from 1 July 2024.
Maillard said the concession contribution cap is due to increase from $27,500 to $30,000 for the 2024–25 income year, which will also mean an increase in the non-concessional cap to $120,000.
“Members triggering the three-year bring forward arrangement may be allowed to make non-concessional contributions of up to $360,000 over three years. The previous limit was $330,000,” he said.
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Maillard said other changes apply from 1 July affecting employers including the increase in the super guarantee rate from 11 per cent to 11.5 per cent.
“While most payroll software would reflect this automatically, it is highly recommended to review your payroll software settings as the Government will be actively pursuing any unpaid super guarantee,” he said.
“The maximum super contributions base is also increasing from $62,270 per quarter to $65,070 per quarter from 1 July 2024.”
While the introduction of the Division 296 tax that applies to balances above $3 million will not commence till 1 July 2025, tax practitioners may also want to start discussing what action the client may want to potentially take, he said.
“Many individuals with super around the $3m cap are already considering taking actions to reduce their superannuation balance. While this may be beneficial for some, it is worth noting that this may not be suited for everyone,” Maillard said.
“The current draft legislation may still change and importantly, some financial analysis may help make a more informed decision.”
Tax professionals should also consider some of the other important aspects of year-end planning as 30 June approaches.
Members in pension phase should ensure that they have withdrawn the minimum amount of pension required, he said.
“This is based on your age and the total superannuation fund balance at the end of the previous financial year. Failure to meet the minimum pension requirement may lead to an individual’s balance being converted back to accumulation phase,” he said.
Maillard noted that individuals often also attempt to maximise their contributions cap before the end of the financial year.
“When calculating the amount of contributions cap remaining, it is worth noting that contributions caps apply individually, not on a fund basis,” he said.
“A member having three different superannuation accounts will only have a $27,500 concessional cap and a $110,000 non-concessional cap prior to 30 June 2024.”
Maillard said it is important to be aware that contributions are accounted for when received.
“A cash contribution paid prior to 30 June but received by the fund after 30 June may not qualify as a contribution in the year you intended to,” he said.
If an individual has unused concessional cap amounts from previous years, Maillard said the individual may be able to carry them forward to increase the contribution cap in later years.
“The general eligibility requirements are for the individual to have less than $500,000 in super and have unused concessional cap amounts from up to 5 previous years,” he said.
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