By Yvette Goss, Accountant and Superannuation Specialist.

As 30^th June draws closer, it is a great time to get up to date on what the superannuation landscape will look like from 1 July 2024.

Super Guarantee percentage is increasing

 Employers should check that their payroll systems update to calculate SG using the new rate which will apply to payroll paid from 1 July 2024.

The ATO are now using Single Touch Payroll (STP) and information reported by super funds to identify employers who are not meeting their Super Guarantee obligations, for example paying super late for employees.  We are seeing more instances where the ATO are contacting non-complying employers to direct them to complete a Super Guarantee Charge Statement and pay fees and interest on the overdue/unpaid amounts.

There was a proposal announced last year that may reduce these late payments, which will require all employers to pay their employees’ superannuation on the same day as their wages (“Payday Super”).  This is proposed to start on 1 July 2026. The consultation process on this measure has begun, but legislation is yet to be drafted, so we will keep you informed as we hear more on this.

Don’t forget that SG contributions must be received by the super fund by the SG quarterly due date or 30 June if you want to make an early payment and claim a tax deduction.  Therefore, payments made to a clearing house (for example via Xero Auto Super) must be done earlier than the due date to make sure that they arrive in the super fund on time.  The only exception to this is if you use the ATO Small Business Superannuation Clearing House where the contributions are considered made on the date the payment is received by the ATO.

Contribution Caps are increasing

# Eligibility to make non-concessional contributions will depend on your Total Super Balance (TSB)

Concessional contributions include:

• Superannuation guarantee contributions from your employer
• Salary sacrifice contributions
• Personal contributions that you are claiming a tax deduction for

What may be useful to you is the ability to carry forward your unused concessional contribution cap amounts to be used in future years for up to five financial years, if your total superannuation balance is less than $500,000 on the previous 30 June.  This applies to unused cap amounts from the 2018/19 financial year onwards, so if you think this may apply to you and you would like to know more, please contact our office.

A key step to remember if you wish to claim a tax deduction for personal superannuation contributions in your individual tax return, is you need to give your superannuation fund a “notice of intent” form to notify them you are going to claim a tax deduction.  If you are going to commence a pension with the contribution, withdrawing some or all of the contribution or are transferring your super to another super fund, you need to give your fund this notice before that occurs.

Once the form is received by your superannuation fund, they will issue you with a written acknowledgement of the amount you will be claiming as a tax deduction.  You have until the date you lodge your tax return for the year the contribution was received or by 30 June the following year to notify your super fund that you are claiming a tax deduction and receive the acknowledgment.

If you want to claim a tax deduction for the 2023/24 financial year, your superannuation fund must receive the contribution by 30 June 2024.

Are you 67 to 74 years of age?

If you are 67 to 74 years of age and wish to claim a tax deduction for a personal superannuation contribution you must meet the work test (unless you have a total superannuation balance of less than $300,000 and have met the strict conditions for the once-off work test exemption).  The work test is:

Be gainfully employed for at least 40 hours in a consecutive 30-day period in the financial year that you make the contribution.

From the 2022-23 financial year onwards, the ATO (not your superannuation fund) determines if you have met the work test when you lodge your individual tax return and could potentially disallow the deduction if they deem that the work test has not been met.   If you have any questions about meeting the work test, please feel free to contact our office.

Non-Concessional Contributions

Non-concessional contributions are personal contributions that are not claimed as a tax deduction and can be made by those aged under 75 years of age (or specifically before the 28^th day of the month after the month you turn 75), depending on your Total Superannuation Balance (TSB) on 30 June of the previous financial year.  TSB includes your member balances across all of your super funds if you have more than one.

If your TSB was $1.9m or more on 30 June 2023, you are unable to make non-concessional contributions in the 2023-2024 financial year.  As your TSB will change from year to year, you may become eligible in future years to once again make non-concessional contributions if your balance reduces.  As the general transfer balance cap of $1.9m is not changing on 1 July 2024, you will need to check if your TSB on 30 June 2024 is under this amount to see if you will be eligible to make non-concessional contributions in the 2024-2025 financial year.

Your ability to utilise the 3 year bring forward rule for non-concessional contributions while under 75 years of age is also affected by your TSB as you can see from the changing thresholds below.  If it is triggered, the bring forward rule means that is the maximum amount of non-concessional contributions you can make over three financial years. Please contact our office if you would like to know more.

Do you have a spouse whose annual income is below $40,000?

Did you know that it is possible to make a contribution to your spouse’s superannuation fund and receive a tax offset?

A maximum tax offset of $540 per year is available (if you meet the conditions) and contribute $3,000 for your spouse while their annual income is less than $37,000, with the offset reducing if their income is between $37,000 and $40,000 (it then phases out completely).

Income includes assessable income, total reportable fringe benefits and total reportable employer super contributions.

Spouse contributions are non-concessional contributions, so your spouse needs to meet other conditions such as being under 75 years of age when the contribution is made and have an available non-concessional cap amount.  Superannuation funds have varying methods/forms for notifying them that the contribution is a spouse contribution, so it is best to get in touch with your spouse’s superannuation fund beforehand to find out what you need to do to make the contribution.  If you need any further information on the tax offset, please contact our office.

Do you receive a superannuation pension?

Now is a good time to make sure that you have withdrawn your minimum pension amount from your super fund for the 2023-24 financial year before 30 June 2024.

Please get in contact with our office if you wish to confirm your minimum amount and to discuss if you have satisfied the minimum pension withdrawal requirement.

The general transfer balance cap (which is the cap on the amount that you can transfer into a tax-free retirement account (pension phase) will not be indexed and will continue to be $1.9 million on 1 July 2024.  Not everyone will have a cap of $1.9 million though, as this depends on the amount that you have previously put into pension phase.  This means that anyone who has started a pension prior to 1 July 2024 will have their own personal transfer balance cap and may have received some (not all) of the indexation from previous years.  If you wish to know what your personal cap is, please contact our office.

Are you are aged 55 years or over and selling your home?

A Downsizer Contribution allows up to $300,000 per person ($600,000 per couple) from the proceeds of the sale of your home to be contributed to super and not be counted towards your non-concessional contributions cap.

To be eligible, in addition to the age requirement, the home must be in Australia and have been owned for at least 10 years, was your main residence for at least part of the time it was owned, and the contribution needs to be made within 90 days of receiving the sale proceeds.  There is a form that needs to be completed and given to your super fund before or at the time of the making the contribution.

You can only do a Downsizer Contribution once and you can do one no matter how much you have in super or if you are 75 years or older as there is no maximum age limit.  You don’t even need to be actually “downsizing” as such, just selling your home. If you would like more information about the Downsizer Contribution, please contact our office.  We recommend that you speak to your financial advisor if you are considering making one.

Do you have a Total Superannuation Balance of more than $3 million?

The Government’s proposed new tax for individuals who have a Total Superannuation Balance of more than $3 million is progressing in the Senate and now has a name – Division 296 tax.  It is proposed to start on 1 July 2025 and will be determined on the “earnings” of the superannuation balances each year to 30 June, so the first calculation of the tax is proposed to be done on 30 June 2026 if your TSB is over $3m on that date.  The earnings amount will include unrealised capital gains.

At the time of writing, the legislation has still not been passed into law, so the final details of the tax are not definite. We will be in contact with our affected clients when they are.

The information provided is general in nature and you we recommend you speak to your financial advisor if you are considering contributing to superannuation.  This information is current at the time of publication and further updates may have occurred since that date.  Please contact us for the latest information.