super contributions limits set to change July 1

On 1 July the limits on super contributions will increase. This increase will apply to both concessional and non-concessional super contributions, so there’s something in this for everyone. It’s the first such rise in contribution limits for three years, so here’s a snapshot of the detail you will need to decide if this means you can further maximise your financial situation.

Why are super contributions limits increasing?

Both concessional and non-concessional super limits are indexed according to the ‘average weekly ordinary time earnings’ (AWOTE) as measured by the Australian Bureau of Statistics (ABS). on 21 February the ABS reported that the AWOTE had risen by 4.5% (seasonally adjusted) to November 2023, triggering an increase in contributions.

How much more can you contribute from 1 July?
That depends on whether you are making concessional (pre-tax) or non-concessional (post-tax) contributions.

Concessional contributions (including salary sacrifice and the compulsory Super Guarantee of 11.5%) are increasing by $2500 per annum from $27,500 to $30,000.

Non concessional contributions are increasing by $10,000 per annum from $110,000 to $120,000.

Can you contribute more than this?

There are rules which allow you to contribute even more concessional contributions in a single year as well as more non-concessional contributions (including the Bring Forward rules which will now allow up to $360,000 to be contributed). But as with all rules, there are conditions that you need to observe. Some aspects of putting extra money into super – for instance the Downsizing contribution where you could contribute up to $300,000 – may only be used once. There are also very different contributions rules according to your age. It’s important that you take the time to check all the terms and conditions on super strategies before moving extra funds. 

Tax advantages

Many retirees are happy to move money into super because of the tax advantages. These vary depending upon whether your super is in accumulation (saving mode) or decumulation (spending phase). But tax is not the only consideration when it comes to making the best use of your savings. Checking all ramifications of extra super contributions is important so that you don’t get caught out by inadvertently losing Age Pension entitlements.

If you would like to learn more about the ways you can use these higher contribution limits, an ‘Understanding Your Super’ consultation allows you to ask all the questions you would like answered, to ensure that you’re making the most of the new contribution limits.

What about you?

Do you still keep up to date with super contribution rules?
Or do you think they only matter for pre-retirees?