From 1 July 2024, the amount you can contribute will increase from $27,500 to $30,000 for concessional super contributions; $110,000 to $120,000 for non-concessional contributions.
Growing Your Super
Contribution caps are indexed to wages growth based on the December quarter average weekly ordinary times earnings (AWOTE) of the previous year.
Indexation Impacts The Following Areas:
- The Government super co-contribution income threshold
- The super guarantee maximum contribution base (limit for compulsory super guarantee payments)
- Tax-free threshold for redundancy payments
- The CGT contribution cap (the amount that can be contributed to super following sale of eligible business assets)
With the 15% tax rate on concessional superannuation contributions and potential tax-free withdrawals, it can be attractive to those with disposable income to make extra contributions.
Capital Gains Tax Liability
You could potentially ‘catch up’ contributions if you have a capital gains tax liability in a particular year. Making a greater contribution can reduce tax to help offset your capital gains tax payment. Check the eligibility criteria and lodge a “Notice of intent to claim or vary a deduction for personal super contributions” with your super fund.
Government Super Co-contribution
The government may make a co-contribution of up to a maximum of $500 if you are a low or middle-income earner making personal non-concessional (after-tax) contributions. If your total income is equal or less than the lower threshold and you make personal non-concessional contributions of $1,000, you will receive the maximum co-contribution of $500.
You do not need to apply for super co-contribution as the ATO will determine whether you are eligible when you lodge your tax return.
Eligibility
- Made one or more personal non-concessional super contributions during the financial year
- Pass the two income tests (income threshold and 10% eligible income tests)
- Less than 71 years old at the end of financial year
- Not hold a temporary visa at any time during the financial year (exemption to NZ citizen or prescribed visa under subsection 20AA(2) of the Superannuation (Unclaimed Money and Lost Members) Act 1999
- Lodged your tax return for the relevant financial year
- Total superannuation balance less than the general transfer balance cap on 30 June of the previous financial year
- Have not contributed more than your non-concessional contributions cap
Income Threshold Test
To receive the co-contribution, your total income must be less than the higher income threshold for that financial year.
Your total income for the financial year is calculated by:
- The total of your
- Assessable income
- Reportable fringe benefits total
- Reportable employer super contributions reduced (but not below zero) by any excess concessional contributions
- Minus your
- Assessable first home super saver released amount (if any)
- Allowable business deductions (relevant to business only)
10% Eligible Income Test
10% or more of your total income must come from either or a combination of:
- Employment-related activities
- Carrying on a business
The Bring Forward Rule (After-Tax)
The bring forward rule allows you to bring up to 2 years’ worth of future non-concessional (after-tax) contributions into the year you make the contribution.
This assumes:
- Total super balance enables you to make the contribution
- Under 75 years of age
Before June 30, the maximum that can be contributed is $330,000, compared with a maximum of $360,000 after 1 July.
Catch Up Contributions (Before-Tax)
If your super balance is below $500,000 prior to 30 June, you can utilise any unused concessional (before-tax) super contribution amounts from the last 5 years.
Transfer Balance Cap Unchanged
The general rate for the transfer balance cap (TBC), which limits how much you can transfer into a tax-free retirement account will remain at $1.9 million for 2024-25. The TBC is indexed by the consumer price index every year.
1 July Revised Stage 3 Tax Cuts
Resident Individuals
| Tax Rate | 2023-24 | 2024-25 |
| 0% | $0 – $18,200 | $0 – $18,200 |
| 16% | – | $18,201 – $45,000 |
| 19% | $18,201 – $45,000 | – |
| 30% | – | $45,001 – $135,000 |
| 32.5% | $45,001 – $120,000 | – |
| 37% | $120,001 – $180,000 | $135,001 – $190,000 |
| 45% | >$180,000 | >$190,000 |
Non-Resident Individuals
| Tax Rate | 2023-24 | 2024-25 |
| 30% | – | $0 – $135,000 |
| 32.5% | $0 – $120,000 | – |
| 37% | $120,001 – $180,000 | $135,001 – $190,000 |
| 45% | >$180,000 | >$190,000 |
Working Holiday Individuals
| Tax Rate | 2023-24 | 2024-25 |
| 15% | $0 – $45,000 | $0 – $45,000 |
| 30% | – | $45,001 – $135,000 |
| 32.5% | $45,001 – $120,000 | – |
| 37% | $120,001 – $180,000 | $135,001 – $190,000 |
| 45% | >$180,000 | >$190,000 |
If you have any queries about growing your superannuation, contact our Solomons Tax and Accounting team to learn more about how you can leverage this opportunity.
