Superannuation contribution rules have been updated for 2024-25. Understanding the current caps, carry-forward provisions, and co-contribution rules can significantly boost your retirement savings.
The 2024-25 financial year brings updated superannuation contribution caps and rules that present significant opportunities for Australians looking to accelerate their retirement savings. Understanding these rules thoroughly is essential to making the most of the available strategies.
Concessional Contributions
Concessional contributions are before-tax contributions that are taxed at 15% within the super fund. For 2024-25, the concessional contribution cap is $30,000. These include employer contributions (including salary sacrifice), personal contributions for which you claim a tax deduction, and mandatory employer superannuation guarantee contributions.
For those with a total super balance under $500,000, unused concessional contribution cap amounts from the prior five years can be carried forward and used in the current year. This catch-up contribution strategy can be particularly powerful for those who have had interruptions to their career or who now find themselves in a position to boost their super significantly.
Non-Concessional Contributions
Non-concessional contributions are after-tax contributions to super. The cap for 2024-25 is $120,000 per year. However, individuals under age 75 may be able to bring forward up to three years' worth of non-concessional contributions, allowing a maximum of $360,000 in a single year, subject to their total super balance.
Importantly, individuals with a total super balance of $1.9 million or more cannot make non-concessional contributions without incurring excess contributions tax.
Government Co-Contributions
For lower-income earners who make after-tax contributions to their super, the government may provide a co-contribution of up to $500. To receive the maximum co-contribution in 2024-25, your income must be $43,445 or less, and you must contribute at least $1,000 of after-tax money to your super.
Spouse Contributions
If your spouse earns less than $37,000 per year, you may be able to claim an 18% tax offset on up to $3,000 of contributions made to their super account. This is an often-overlooked strategy that can simultaneously build your partner's retirement savings and reduce your tax liability.
Timing is Everything
The end of the financial year on 30 June represents a hard deadline for contributions. If you're planning to make additional contributions — particularly using salary sacrifice or personal deductible contributions — ensure they are made and received by your super fund before this date.
If you're unsure how to optimise your super contributions for your individual circumstances, Pointers Consulting can provide personalised advice to help you make the most of the available opportunities.