Now that we’re a few months into the 2025 financial year, several important changes have been introduced to Superannuation, and we wanted to provide you with a comprehensive update to keep you fully informed.
Concessional contributions cap
The concessional contributions cap is the maximum before-tax contributions you can contribute to your super each year without contributions being subject to extra tax.
From 1 July 2024, the concessional contributions cap increased from $27,500 to $30,000.
Catch-Up Contributions
If your super balance is below $500,000 as at 30 June 2024, and you want to take advantage of this opportunity and increase the amount you hold in super, you can utilise any unused concessional super contributions amounts from the last 5 years.
This can be a very powerful tax planning opportunity.
We have previously issued a number of blogs regarding Unused Superannuation Contributions. Read our latest blog on this here.
Non-concessional contributions cap
The non-concessional contributions cap is the maximum amount of after-tax contributions you can contribute to your super each year without contributions being subject to extra tax.
From 1 July 2024, the non-concessional contributions cap increases from $110,000 to $120,000. This is now reviewed annually to remain in line with average weekly ordinary time earnings (AWOTE). If you contribute more, you may have to pay extra tax.
If your total super balance is equal to or more than the general transfer balance cap of $1.9M from 2023–24 at the end of the previous financial year, your non-concessional contributions cap is nil ($0) for the current financial year.
Using the Bring-Forward Rule
The Bring-Forward Rule enables you to bring forward up to 2 years worth of future non-concessional contributions into the year you make the contribution.
If you are eligible to utilise the bring-forward rule the maximum that can be contributed is $360,000.
You are only eligible to bring forward the next 2 years of contributions if you are under 75 years on 1 July of the first financial year in which your total super balance of the previous financial year was less than $1.66 million from 1 July 2024.
Increase in Superannuation Guarantee
Superannuation Guarantee is the percentage of your salary that your employer is required to contribute to your superannuation account.
From 1 July 2024, the Super Guarantee increased from 11.0% to 11.5%.
This will then increase by 0.5% on 1 July 2025 to reach 12%.
Proposed $3 Million Superannuation Cap
From 1 July 2025, the Government has proposed an ‘additional’ tax of 15% on earnings on an individual’s superannuation benefits over $3 million at the end of a financial year.
Please note – This is not yet law.
Some of the features of this new proposal are as follows:
- This is intended to apply to individuals with a total superannuation balance across all superannuation accounts held by the member that exceed $3 million
- A couple can still have up to $6 million in superannuation before being impacted (provided both members have balances not exceeding $3 million)
- The additional tax is only calculated on the proportion of assets over the $3M balance
- The 15% additional tax is calculated on a member’s total superannuation balance which includes unrealised gains or losses
- This may cause cash flow issues as the additional tax is payable on assets that are yet to realise their value
- If the fund has negative earnings during a financial year, the loss will be carried forward to be offset against future ‘earnings’ and there is no mechanism to carry back a negative earnings amount where in one financial year there is an unrealised gain and a future year there is a loss.
- There is no mechanism for the $3 million threshold to be indexed.
If you have any questions about any of the above, give us a call on (03) 9824 5275, or book a free initial consultation here!
The above changes in Superannuation create great Tax Planning opportunities that we recommend you consider.
Kind Regards,
Eric Cirulis
Director/CEO