Concessional (before-tax) contributions cap
Concessional contributions include compulsory super contributions made on your behalf by your employer, including salary sacrifice, as well as any personal contributions you make to super which you claim as a tax deduction.
There is a cap associated with concessional super contributions which is the maximum amount you can contribute to your super without being required to pay a higher tax rate.
The cap on concessional contributions will increase from $27,500 to $30,000 for the financial year 2024-25.
Carry forward concessional contributions
If you’ve had time out of work raising kids or for other lifestyle reasons, or you haven’t had the money to boost your super until now, you could take advantage of carry forward concessional contributions (also known as catch-up contributions).
To be eligible for catch-up contributions, your total super balance at 30 June of the last financial year must have been below $500,000.
If you’re eligible, your concessional contribution cap for the financial year is the annual cap plus any unused concessional contribution caps for the last five financial years. Catch up contributions can help you to make up for past years where you may not have utilised all your concessional contributions cap.
If you have increased income for the financial year, taking advantage of the catch-up contributions can help you claim a larger tax deduction.
Non-concessional (after-tax) contributions cap
From 1 July 2024, you may be able to add more into super by making personal, after-tax contributions with the cap increasing from $110,000 to $120,000 per year.
You can make additional contributions with your after-tax money—including those made from savings or your take-home pay.
To be eligible to make after-tax contributions you must be less than 75 years old and your total super balance last 30 June must be less than $1.9 million.
Non-concessional contributions bring forward rule
This rule relates to after-tax super contributions and may allow you to contribute more into super by bringing forward up to two years' worth of after-tax contributions in addition to the annual cap.
The total amount you have in super at the end 30 June of the last financial year will affect whether you are eligible to make any non-concessional contributions. Your total super balance also determines the maximum amount you can contribute and if you have triggered the bring forward rule in the previous two financial years.
For example, in 2024-25, if your total super balance is less than $1.66 million at 30 June 2024, and you did not use the bring-forward rule in the previous two financial years (FY 2022-23 and FY 2023-24), you may be able to contribute up to $360,000 in 2024-25, three times the annual cap, using the bring forward rule.
If your total super balance is between $1.66 million and less $1.78 million, you can contribute up to $240,000, and if your total super balance is 1.78 million but less than $1.9 million, the maximum you can contribute is $120,000.
Seek professional help
Super rules can be complicated to understand so speaking with professional can help to give you peace of mind. Alternatively, for more information visit the Australian Taxation Office website at ato.gov.au.
Financial advisers can tailor a super strategy that suits your circumstances and goals. They can also provide valuable insights into the best investment options and insurance coverage for you.
Bottom line: remaining informed about the changes to super rates and rules is key to securing a comfortable retirement. If you’re unsure how it may benefit you, consider speaking to a professional.
Taxation law is complex, and this information has been prepared as a guide only and does not represent taxation advice. Please see your tax adviser for independent taxation advice.
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