Changes to your superannuation announced in May 2024

The government have made a raft of changes that may impact you and your superannuation – depending on your circumstances. These were implemented from 1 July 2024. Please see below for an overview of the changes and how they may impact you.

Superannuation Guarantee is increasing and soon will be more frequent

The Superannuation Guarantee amount that your employer pays their eligible employees has increased from 11% to 11.5% per annum. This is calculated as a percentage of your ordinary time earnings (your wages) and is paid into your super account on your behalf. The amount will increase again from 1 July 2025 to 12% per annum.

From 1 July 2026, your employer will also have to pay your superannuation contributions into your account at the same time you are paid your wages. Currently, the law states contributions only have to be made quarterly.

Contribution caps

As well as contributions that your employer makes on your behalf, you can make additional contributions to your superannuation account from your before-tax salary (known as salary sacrifice or concessional contributions) or your after-tax salary (known as non-concession contributions), up to certain limits. These are known as contribution caps.

For the 2024/2025 tax year, the following limits apply to these contributions:
-    Before-tax contribution limit is $30,000 per annum, which increased from $27,500 last year. If you make these contributions, you may be entitled to claim a tax deduction.
-    After-tax contribution limit is $120,000 per annum, which increased from $110,000 last year. For these contributions, you can’t claim a tax deduction.

This means you can take advantage of government initiatives like: 
-    Carry-forward rule means that the unused portion of your concessional contribution cap(pre-tax contributions), if you’re eligible, can be carried forward from this year and the previous 4 years (total of 5 years).  Visit the ATO website for more information. 
-    Bring-forward rule which means that the unused portion of your non-concessional contribution cap (after-tax contributions), if you’re eligible, can be brought forward, and you could make after tax contributions up to a maximum of $360,000.

Superannuation is payable for those on Government paid parental leave

For babies born on or after 1 July 2025 for both natural and adoptive parents, if you’re eligible to receive the Government funded Paid Parental Leave payment, you will also receive superannuation contributions on top of these payments. Payments will be payable from 1 July 2025 and will be made annually.

This will mean that people taking career breaks to care for their babies, will continue to grow their superannuation account balance while on parental leave.  

Deeming rates freeze

The Federal Budget announcements made in May 2024 also included a 12-month extension to the freeze on deeming rates. This freeze will remain until 30 June 2025. Deeming rates are the percentages that the government sets and are used by Centrelink to determine how much you will earn as a retiree over the next 12 months, from your superannuation and other investments.

Reduced tax concessions for high superannuation account balances

From 1 July 2025, the Government will reduce the superannuation earning tax concessions, if your superannuation balance is greater than $3m. If your superannuation account balance exceeds this amount, you will pay 30% on any earnings above this amount.

If you have any questions in relation to these changes, please reach out to your financial adviser.