Superannuation rules and regulations are constantly changing. To ensure you are optimising your retirement savings it is important that you stay up to date with these changes and the Team at BlueRock is here to assist. This is especially important if you have a SMSF.
1. Increase of Concessional Contribution Cap to $30,000
Concessional contributions are made into your Superannuation Fund from your before-tax income (employer contributions) and after-tax income where you claim a deduction for the contribution in your personal tax return (personal concessional contributions).
From 1 July 2024, the concessional contribution cap increased to $30,000, allowing individuals to put more money into their Superannuation Fund. This is helpful for individuals looking to boost their retirement savings in a tax-efficient way. A reminder that this cap includes super guarantee contributions that are paid to your Superannuation Fund by your employer. This rate has also increased from 1 July 2024 to 11.5%.
If you're currently in a salary sacrifice arrangement we recommend you speak to a financial advisor to review this arrangement for the increased cap.
2. Increase of Non-Concessional Cap to $120,000 (Bring Forward now $360k)
Non-concessional contributions are made from after-tax income and no tax deduction is claimed for these contributions. From 1 July 2024, the non-concessional contribution cap has increased to $120,000 per annum with the option to bring forward two years' worth of contributions, making it possible to contribute up to $360,000 in one financial year.
Please note that in order to be eligible for this your Total Superannuation Balance must be less then $1.9 million as at 30 June of the prior financial year. We recommend that you speak to a financial advisor before making any contributions.
3. Carry Forward Concessional Contributions
If you have not utilised your concessional contribution cap in full in a prior financial year, you may be able to use this “unused cap” in the current financial year to increase your current year concessional contributions. For example the concessional cap for the 2024 financial was $27,500. If you had only utilised $17,500 of this you may be eligible to use the remaining $10,000 cap in the current financial year (in addition to the $30,000 cap for the 2025 financial year).
The ATO allows unused caps to be carried forward for up to 5 years . Please note that in order to be eligible for this your Total Superannuation Balance must be less than $500,000 as at 30 June of the prior financial year.
Talk to Your Financial Advisor or Review Your Strategy Around Increasing Contributions
With the increases in these caps, it's an opportune time to consult with a Financial Adviser to discuss the possibilities of increasing contributions to your superannuation or SMSF. A good financial advisor can help you develop a strategy tailored to your financial situation and retirement goals .
4. 50% Reduction in Minimum Pension Requirement is Over
During COVID-19, the government allowed for a 50% reduction in the minimum pension payments required from Superannuation Funds, which helped retirees to preserve their balances during the volatile market conditions. However, this reduction was repealed from the 2024 financial year onwards, meaning minimum pension payments must return to normal levels.
SMSF members must consider whether they have enough liquidity in their SMSF to cover the increased pension payments without needing to sell down assets at unfavourable times. This is an ideal opportunity to speak with a financial advisor to discuss and review the investments and liquidity of your SMSF.
5. Increasing Interest Rates Can Impact Returns
Interest rates are at their highest levels since 2011. This can have implications for SMSFs with limited recourse borrowing arrangements (LRBAs) used to acquire property. Higher rates can impact the cash flow required to service loans and, subsequently, the overall investment strategy of the SMSF.
Now is the perfect time to have your SMSF loan reviewed by a finance broker who can investigate the potential for refinancing or restructuring to secure a better interest rate and ensure the loan continues to serve the best interests of the fund's investment strategy.
Talk to BlueRock’s Wealth, Finance & Superannuation Experts
Whether you have an SMSF or not, superannuation should be a major consideration in your wealth building and retirement planning strategies. It’s never too late to start maximising super and its potential tax benefits, so reach out to our Melbourne-based financial planners or SMSF experts via the form below to learn more about how we can help.
Disclaimer: The information in this article is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. This information has been prepared without taking into account any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information before acting or seek advice before making any financial decisions.
