Superannuation planning options - 2024 Year

As 30 June is quickly approaching, you may be considering topping up your superannuation contributions and perhaps claiming a tax deduction.  There have been a number of changes to the superannuation concessions in recent years and we provide this summary to help clarify the current rules.

 

Concessional (tax deductible) contributions cap

 

Your concessional contribution cap for the 2024 financial year is $27,500.

 

If you are between the age of 67 and 75 you need to satisfy the work test (refer below).

 

Your concessional contributions cap includes the 11% compulsory Superannuation Guarantee contributions, salary sacrifice contributions paid by your employer on your behalf, and personal contributions you make and that you wish to claim a tax deduction for in your personal tax return for the 2024 financial year.

 

Carry-forward concessional contributions

You may be able to carry-forward any unused amount of your concessional contributions cap in prior years and use it this financial year.

To be eligible to carry forward any of your unused concessional contributions cap:

  • You must have had a total superannuation balance (all of your superannuation entitlements across all superannuation funds) of less than $500,000 at 30 June 2023

  • You may only claim a tax deduction for any carried forward concessional contribution cap amounts from a previous financial year, over a rolling five- year period.  Amounts carried forward that have not been used after five years will expire

 

This concession may make it easier for business owners with varying cash flow, or people with varying capacity to save, to contribute to superannuation and benefit from the tax deduction, as do those with regular incomes.

You can find out if you have a carry-forward concessional cap through your MYGOV account at ATO/Super/ Carry forward concessional contributions.  Alternatively, contact DBS and we can obtain this information from the ATO on your behalf.

 

Timing is important

 

Whether paid personally or by an employer, in order to be tax deductible, concessional superannuation contributions must be “in the hands of the superannuation fund” no later than 30 June 2024. Since 30 June 2024 falls on a Sunday, it will be important that contributions are paid at least a few days before the weekend, not on Friday 28th June.

 

Also, timing issues may arise around 30 June each year with respect to the actual receipt of concessional contributions, so we suggest you check with your superannuation fund and employer to confirm the amounts of concessional contributions already received and expected to be received in the 2023/2024 financial year.

 

Tax issues to consider

 

Personal concessional contributions are deductible in your tax return and taxed at 15% in the fund.

 

To be tax effective, your marginal rate of tax should be more than 15% before claiming a superannuation contribution deduction which equates to an income more than the tax-free threshold of $18,200.

 

Also, additional tax up to 15% is payable on concessional contributions where your adjusted income exceeds the threshold of $250,000 resulting in a total tax payable up to 30%.

 

The work test exemption

 

Workers aged 67 to 74 may still be able to make concessional contributions for 12 months from the end of the financial year in which they last met the work test. To be eligible you need to satisfy the following conditions:

 

  • Satisfied the work test in the financial year before the year in which you make the contribution. For example, for the 2024 financial year, you worked at least 40 hours within a 30 day period between 1 July 2022 and 30 June 2023

  • Your total superannuation balance as at 30 June 2023 (from all of your superannuation accounts) is less than $300,000

  • You haven’t previously used the work test exemption

 

Non-concessional superannuation contributions

 

Your non-concessional contributions cap for the 2024 financial year is $110,000.

 

You are eligible to make non-concessional contributions provided you are under 75 years of age at the time of making the contributions and your superannuation balance is less than $1.9M as at 30 June 2023. If you are turning 75, remember that contributions are typically only accepted until 28 days after the month of your 75th birthday.

 

Also, you may be eligible to bring forward up to 3 years of non-concessional contributions ($330,000) in the 2024 financial year provided you are under 75 years and do not exceed the superannuation balance threshold of $1.68M as at 30 June 2023. The upper limit of $330,000 is transitioned to nil where your superannuation balance exceeds $1.9M.

                              

Government co-contribution

 

If you are a low or middle-income earner and make personal non-concessional contributions to your superannuation fund, the Government will also make a contribution (called a co-contribution) to your fund, up to a maximum amount of $500. To receive the maximum Government co-contribution, you must:

 

  • Be less than 71 years old at the end of the financial year on 30 June 2024

  • Have assessable income (inclusive of any fringe benefits and salary sacrifice superannuation contributions) in the 2024 financial year of less than $43,445 and 10% or more of that income must come from employment or carrying on a business

  • Have made at least $1,000 of personal non-concessional contributions to your superannuation fund during the 2024 financial year, but no more than your non-concessional contribution cap of $110,000

  • You had less than $1.9M in total combined superannuation entitlements as at 1 July 2023

 

A partial co-contribution may be available where your assessable income is between $43,445 and $58,445.

 

Contribution splitting

When you split your concessional contributions, you transfer or roll over a portion of the contributions you made to your superannuation account (up to 85% of the contribution after allowing for the 15% contribution tax), to your spouse’s superannuation account.

This can be a useful strategy in equalising the superannuation balances between spouses and maximising the available superannuation concessions.

Spouse contributions tax offset

 

The Government has extended the spouse tax offset to assist more couples who support each other in saving for retirement. You can claim a personal tax offset against your tax payable of up to $540 for non-concessional contributions made on behalf of your dependant spouse. The tax offset is calculated at the rate of 18% of the contribution made, so a contribution of $3,000 x 18% attracts the maximum tax offset of $540 against your personal tax payable.

 

To be eligible you need to satisfy the following conditions:

  •  Your spouse was under age 75 at 1 July 2023

  • You make non-concessional contributions to a superannuation fund in the name of your spouse

  • Your spouse has not already made maximum non-concessional contributions in the 2024 financial year and has less than $1.9M in total superannuation entitlements at 1 July 2023

  • Your spouse’s income (inclusive of fringe benefits and salary sacrifice superannuation contributions) is $37,000 or less

 A partial offset is available where your spouse’s adjusted income is over $37,000 but less than $40,000.

  

Downsizer superannuation contribution

 

The downsizer concession is outside the regular superannuation rules and allows you and your spouse to each top up your superannuation balance where you are over 55 years, although counts towards your transfer balance cap when you commence a pension. The contribution does not affect your non-concessional superannuation cap.

 

The contribution is capped at $300,000 for each person, resulting in a combined contribution of $600,000 for a couple.

 

It is important to note that the downsizer contribution must be made within 90 days of settlement of your main residence.

DBS Accountants & Business Advisers