Here’s a quick rundown of the latest law changes
They say nothing is certain in life except two things – death and taxes. Australians can probably add a third – the knowledge that come the end of the financial year, the rules around superannuation and taxation will inevitably change. Here’s a comprehensive guide to the key changes taking effect on 1 July 2024.
Superannuation Contributions – Good News for Employees
Employer Contributions Increase
From 1 July 2024, the compulsory super guarantee (SG) payment for PAYG employees will increase by 0.5% to 11.5%.
Higher Contribution Caps
Both pre-tax ‘concessional’ and after-tax ‘non-concessional’ contribution caps are increasing, allowing you to funnel more money into your superannuation.
- Concessional Cap: Increasing from $27,500 to $30,000 annually.
- Non-Concessional Cap: Increasing from $110,000 to $120,000 annually.
If your super balance is less than $1.66 million as of 30 June 2024, you may bring forward up to three years of non-concessional contributions, totaling $360,000.
Table 1. Non-Concessional Contribution Caps
| Total Super Balance (TSB) at 30 June 2024 | NCC Cap in 24/25 | Bring-Forward Period |
|---|---|---|
| <$1.66 million | $360,000 | 3 years |
| $1.66m – $1.78m | $240,000 | 2 years |
| $1.78m – $1.9m | $120,000 | Standard NCC cap |
| >$1.9m | Nil | N/A |
These changes may impact your super strategies, particularly regarding salary sacrifice arrangements.
Preservation Age – Turning 60 in 2024/25
If you’re turning 60 in the 2024/25 financial year and born after 1 July 1964, you can start accessing your super:
- Retired Individuals: Withdraw larger lump sums without the low-rate cap of $235,000 and enjoy tax-free pension income payments.
- Working Individuals: Use a Transition to Retirement (TTR) strategy to draw regular income up to 10%, though lump sum withdrawals are not permitted.
Income Tax – Upcoming Stage 3 Tax Cuts
The Government’s long-awaited ‘stage 3’ tax cuts will come into effect on 1 July 2024, benefiting all personal income taxpayers.
Table 2. Tax Cuts from 1 July 2024
| Taxable Income | Tax Payable 2023/24 | Tax Payable 2024/25 | Tax Cut |
|---|---|---|---|
| $40,000 | $4,367 | $3,713 | $654 |
| $60,000 | $11,067 | $9,888 | $1,179 |
| $80,000 | $18,067 | $16,388 | $1,679 |
| $100,000 | $24,967 | $22,788 | $2,179 |
| $120,000 | $31,867 | $29,188 | $2,679 |
| $140,000 | $39,667 | $35,938 | $3,729 |
| $150,000 | $43,567 | $39,838 | $3,729 |
| $160,000 | $47,467 | $43,738 | $3,729 |
| $180,000 | $55,267 | $51,538 | $3,729 |
| $190,000 | $59,967 | $55,438 | $4,529 |
| $200,000 | $64,667 | $60,138 | $4,529 |
Source: Australian Treasury Tax Cuts Calculator
EOFY Tax Strategies
To maximise your tax benefits:
- Before 1 July 2024: Consider bringing forward tax deductions by making personal deductible contributions to super and prepaying deductible expenses.
- After 1 July 2024: Consider deferring taxable income from asset sales, employment termination payments, and super withdrawals.
Get Personalised Advice
Everyone’s circumstances are unique. To make the most of these super and tax changes, connect with the Inspired Money Team. Visit the Inspired Money website or contact us at admin@inspiredmoney.com.au or 08 6222 7909.
Current as of May 2024.
