Australians are set to experience a series of changes aimed at fortifying retirement savings and bolstering financial security. Here's an overview of the upcoming amendments and their implications for Superannuation.
Maintaining the Increase to the Super Guarantee:
The Federal Budget in May 2023 reaffirmed the commitment to the Super Guarantee's gradual ascent to 12%. Effective from 1 July 2024, the Super Guarantee will rise to 11.5%, with a subsequent annual increase of 0.5% to reach the mandated 12% by 2025.
Increasing the Contributions Cap:
The maximum Concessional and Non-Concessional Contribution limits are also increasing. From 1 July 2024, you will be able to contribute up to $30,000 of Concessional Contributions (including Employer Super Guarantee) and up to $120,000 for Non-Concessional Contributions into your Superannuation accounts.
Concessional Tax Rate Changes for High Balances:
Subject to legislative passage, significant adjustments will be made to the concessional tax rates applied to super balances exceeding $3 million, commencing from 1 July 2025. Future earnings on balances surpassing this threshold will be subject to an additional 15% tax, including on unrealised gains. This alteration is anticipated to affect approximately 80,000 individuals in the 2025/26 financial year, reflecting a targeted approach to ensure fairness and sustainability within the superannuation framework.
Requiring Super to Be Paid with Salary and Wages:
From 1 July 2026, employers will be mandated to remit their employees' super alongside their salary and wages payments. This measure aims to combat the pervasive issue of unpaid super, which amounts to approximately $5 billion annually. By aligning super payments with regular payroll cycles, this reform facilitates enhanced transparency, streamlines monitoring for compliance by the ATO and mitigates the accumulation of substantial super contribution arrears. Moreover, transitioning to more frequent super payments will boost the compounding effect of retirement savings, ultimately benefiting over 4 million Australians receiving their super on a quarterly basis.