Super contribution caps to increase from 01 July 2024
More changes to superannuation are on the way, with the recent announcement that contributions caps will increase on the back of a 4.5 per cent rise in Average Weekly Ordinary Time Earnings (AWOTE) in the year to November 2023.
From 01 July 2024, the concessional contributions (pre-tax) cap will increase from $27,500 to $30,0000 and the non-concessional (after-tax) contributions will increase from $110,000 to $120,000. These contributions caps last increased in July 2021 and before that in 2017.
The concessional and non-concessional contribution caps are summarised below:
| Contributions Caps | 2023-2024 | 2024-2025 |
| Concessional | $27,500 | $30,000 |
| Non-Concessional | $110,000 | $120,000 |
| Bring Forward | $330,000 over 3 years | $360,000 over 3 years |
The adjustment to these caps also means that, in some cases, people can bring forward the equivalent of one or two years of their annual non-concessional cap allowance from future years - e.g. it is possible for some to contribute three years of non-concessional caps, or a total of $360,000 from 01 July 2024.
Those with little or no mortgage commitment and high levels of disposable income, mostly baby boomer pre-retirees keen to top-up their superannuation balances, are considered most likely to take advantage of this change. That said however, the amended stage three tax cuts (which have now passed legislation) taking effect at the same time could mean others outside this older demographic could have additional cash to put into super.
While the contributions caps are increasing, the Total Superannuation Balance (TSB) threshold and the Transfer Balance Cap (TBC) won't increase from 01 July. Both will remain at $1.9 million for 2024-2025.
The Transfer Balance Cap is the critical number for anyone looking to use the bring forward rule. For example, someone wishing to initiate a three year bring forward period this year needed to have less than $1.68m in super at 30 June 2023 ($1.9m - (2 x $110,000)). The equivalent TBC threshold at 30 June 2024 is lower at $1.66m ($1.9m - (2 x $120,000)).
If you're thinking of using the bring forward rule for your super contributions, either before or after 30 June this year, it's best to check with us first around your eligibility to do so around the TBC thresholds.