Good news for those planning for retirement! Starting July 1, 2024, there will be an increase in superannuation contribution caps, making it easier for you to save more for your future.
What are contribution caps?
Contribution caps are limits the government sets on how much money you can add to your superannuation each year. There are two types: concessional contributions (before tax) and non-concessional contributions (after tax).
Concessional Contributions (CC): These are contributions like superannuation guarantee payments from your employer or salary sacrifice contributions, which are taxed at a lower rate of 15%.
Non-Concessional Contributions (NCC): These are voluntary contributions from your after-tax income, like adding extra money from your bank account to your super.
What are the changes?
From July 1, 2024, the contribution caps will increase as follows:
– The concessional contributions cap will increase from $27,500 to $30,000.
– Non-concessional contributions cap will increase from $110,000 to $120,000.
– The maximum non-concessional contributions cap under the bring-forward rules will rise from $330,000 to $360,000.
What are the bring-forward rules?
These rules apply to non-concessional contributions and allow you to contribute up to three times the annual cap in a single financial year if you’re eligible. For example, if the annual cap is $120,000, you could contribute up to $360,000 in one go.
What should you be cautious about?
If you’ve already triggered the bring forward rule in either the current financial year or the previous one, the increased cap won’t apply to you. This means your cap will remain as it was when you triggered the rule. So, if you want to maximise your contributions using the bring forward rule, it might be wise to keep your contributions this year under $120,000.
It’s important to note that exceeding these contribution caps can lead to excess tax, so it’s essential to understand the rules and your eligibility before making contributions.
If you have any questions or need more information about these changes, feel free to reach out to us. We’re here to help you make the most of your superannuation savings.
