Changes to superannuation contribution caps

There are caps or limits on how much can be contributed to a superannuation fund each year.

Contributions to superannuation funds are categorised (generally) as concessional contributions or non- concessional contributions. Concessional contributions are tax deductible and non-concessional contributions are not. The non-concessional contributions cap is four times the concessional contributions cap.

The cap on the amount of concessional or non- concessional contributions is indexed, depending on the Average Weekly Ordinary Time Earnings (AWOTE). The required increase in AWOTE has occurred such that the contribution caps will be increased from 1 July 2024.

Superannuation contribution caps to increase

The standard concessional contributions cap will increase from $27,500 to $30,000.

The standard non- concessional contributions cap will increase from $110,000 to $120,000. This also means that the maximum non-concessional contributions “bring forward” cap will increase from $330,000 to $360,000. The amount that can be contributed under the “bring forward” rule is affected by an individual’s “Total Superannuation Balance”. The “bring forward” rule enables up to three years of future non-concessional contributions to be brought forward or contributed earlier.

For some people, their personal concessional contribution cap may be higher than mentioned above if they are eligible to benefit from unused carried forward concessional contribution cap amounts from previous years. Individuals with a total superannuation balance of less than $500,000 on 30 June of the previous financial year can make additional catch-up concessional contributions for unused cap amounts from the previous 5 years.

The General Transfer Balance Cap, which is also indexed when the Consumer Price Index moves sufficiently, will not be adjusted for the year ending 30 June 2025. This will remain at $1.9 million. The General Transfer Balance Cap is used to place a cap on the amount of money an individual can have in the retirement phase of a superannuation fund and obtain a nil rate of income tax on investments in the fund.

Learn more: Tax deduction opportunities with Super

Do you have an SMSF?

As of 30 June 2023, there were 610,000 and SMSF assets totalled $876 billion, which is about 25% of all superannuation assets.

If you have a self-managed superannuation fund (SMSF), it is important to maintain good records.

There are many benefits to applying good record-keeping habits for your SMSF. It is also a legal requirement.

The benefits of good record-keeping include:

  • Making it easier for you to provide information to your SMSF professionals for independent audit and annual return preparation;
  • Helping reduce audit and administration costs; and
  • Avoiding the risk of receiving administrative penalties that are personally payable by each individual trustee or the corporate trustee of the fund.

Remember, even if you use a superannuation or tax professional to administer your SMSF, each trustee is still responsible for good record-keeping.

Prepare to lodge your SAR by 15 May

Your SMSF annual return (SAR) for 2022–23 is due by 15 May 2024. Accordingly, you need to have appointed an auditor by now (an auditor must be appointed no later than 45 days before lodgment of the SAR, i.e. no later than 1 April 2024 to meet the May 25 2024 deadline).

In preparation for your lodgment, you also need to:

  • Complete a market valuation of all your assets;
  • Prepare your fund’s financial statements; and
  • Provide signed copies of documents to your auditor — so they can determine your financial position and your fund’s compliance with superannuation laws.

Remember, if your SAR is more than two weeks overdue, and you have not contacted the ATO, the status of the SMSF will be changed on Super Fund Lookup to ‘Regulation details removed’. This status will remain until any overdue lodgments are brought up to date.

If you have a status of ‘Regulation details removed’, APRA funds will not be able to roll over member benefits and employers will not be able to make any superannuation guarantee payments to the fund’s members.

If you need to use a registered tax agent to prepare your SMSF’s annual return, talk to us as soon as possible.

Quarterly TBAR lodgment reminder

If you had transfer balance account events in the last quarter, you must lodge a TBAR by 28 April 2024.

SMSFs must report certain events that affect a member’s transfer balance account (TBA) quarterly using a transfer balance account report (TBAR). These events must be reported even if the member’s total superannuation balance is less than $1 million.

You must report and lodge within 28 days after the end of the quarter in which the event occurs. You are not required to lodge a TBAR if no TBA event occurred during the quarter.

You should always refer to event-based reporting for SMSFs and the TBAR instructions when preparing your TBAR.

You can lodge your TBAR through Online services for business or your tax agent can do it for you through their online services.

If your SMSF does not lodge a TBAR by the required date, the member’s transfer balance account may be adversely affected. The member may need to commute any amounts more than their cap and pay excess transfer balance tax.

Contact us today if you need assistance with super contributions.

About our advisers

Michael Fox has been dedicated to the success of his clients, devising comprehensive wealth strategies for both personal and business growth for over 4 decades. With extensive expertise in business governance and family business succession, Michael specialises in empowering emerging businesses and family enterprises by fostering renewal, enhancing value and smooth transitions to the next generation. Please do not hesitate to reach out if you need assistance.

Chrisanthe Lekatis is renowned for her expertise in management accounting, virtual CFO services, and top-tier business advice. She empowers management with tailored strategies for success, streamlining processes to achieve efficient and cost-effective outcomes. Her commitment to building trust and lasting relationships goes beyond professional excellence; it’s a personal ethos. By actively listening and understanding her clients’ businesses and goals, Chrisanthe thrives on collaborative efforts to navigate challenges and collectively achieve their aspirations. Please do not hesitate to reach out if you need assistance.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or get professional advice from a qualified accountant or financial adviser at KMT Partners.