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INSIGHTS WITH EVALESCO
Strategies and Updates For The New Financial Year
by Kate Buhagiar | 28 Apr 2024
TOPICS DISCUSSED
New increased super contribution caps
Increase in non-concessional cap
Utilising unused amounts
Upcoming Stage 3 tax cuts
How do these tax cuts affect Australian workers?
Assistance
It’s time to make sure everything is in order for the end of the financial year (EOFY), with the impending increase in contribution caps set to take effect from July 1st 2024.
New increased super contribution caps
The concessional contribution cap is the maximum amount that you can contribute towards your super before tax and this July, this cap is increasing from $27,000 to $30,000.
It is important to note that these concessional contributions include the combined employer contributions and salary sacrifice contributions and, as such, you need to ensure that you do not exceed this newly prescribed annual limit.
If you are unsure how to track your current balance please reach out to your adviser or head to the ATO website.
Increase in non-concessional cap
The non-concessional contributions cap, representing the maximum amount of after-tax contributions allowable into one’s super fund annually without incurring additional taxes, will also rise. Increasing from $110,000 to $120,000, this cap is precisely four times the amount of the concessional cap.
For individuals whose total super balance equals or exceeds the general transfer balance cap ($1.9 million from 2023–24 and 2024-25) at the end of the previous financial year, the non-concessional contributions cap for the current financial year is zero.
Utilising unused amounts
If you have not utilised the full concessional cap in previous years, you may be entitled to carry forward this balance, provided your super balance remains below $500,000 as of June 30th of the preceding financial year. You may be able to carry forward up to five years’ worth of unused concessional contribution cap amounts.
Upcoming Stage 3 tax cuts
With the Stage 3 tax cuts scheduled to commence on July 1st, 2024, the timing of concessional contributions may impact potential tax benefits. For some, making contributions before the tax cuts take effect could yield greater advantages. It’s advisable to speak with your adviser to determine the most advantageous course of action based on your circumstances.
| Bracket | 2023-24 Tax Rates | Revised Stage 3 Tax Cuts |
|---|---|---|
| 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 + | $190,001 + |
How do these tax cuts affect Australian workers?
Mainly, they will increase the amount most Australian workers get paid after tax. These cuts were revised to help with cost-of-living pressures, by taking less tax out of Australian worker’s pay each week.
These changes won’t come into effect until the 2024-25 financial year, so keep an eye out on your first pay after 1st July 2024 to see a small increase in your take-home salary. If for any reason there isn’t a change, please contact your employer.
If you wish to calculate exactly how much your tax liability will change from the 1st July, you can head to the www.treasury.gov.au tax cuts calculator and enter your exact yearly income.
Assistance
If you require guidance on how the changes in contribution caps may impact you or if you’re eligible for the bring forward rule, contact your adviser or our team for further assistance.
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