Concessional and Non-concessional Caps – What’s the limit in 2024!

Good News!! An announcement made on 22nd February of November AWOTE figure means we now know exactly what the thresholds and cap for the year 2024/25 will be. The indexation of Australia’s superannuation contributions caps is linked to increases in average wage growth in Australia, as measured by the Average Weekly Ordinary Time Earnings (AWOTE).

AWOTE figures published recently by the Australian Bureau of Statistics (ABS) mean from 1st July 2024, the amount Australians can contribute to their super fund will change, providing increased opportunities to save for retirement and minimize tax payable.

These changes include an increase in the annual limit of concessional and non-concessional contributions, the bring forward caps and the total superannuation balance threshold that apply to determine the maximum amount of bring forward non-concessional contributions.

Concessional and non-concessional contributions

The concessional contribution cap, which applies to employer and salary-sacrificed contributions, as well as personal contributions claimed as a tax deduction, will increase from $27,500 to $30,000. This can mean that superannuation fund members can reduce their taxable income by contributing more to their super.

The non-concessional contribution cap (NCC), which applies to after-tax contributions, and since this is 4 times the concessional contributions limit, will increase from $110,000 to $120,000 (of $240,000 and $360,000 for those using bring forward rules). This can mean that superannuation fund members can add more to their superannuation balance from their savings or inheritances, without paying extra tax.

What about people already in a 2 or 3-year bring-forward period?

They don’t get any benefit from the increase until their bring-forward period is over. So, someone with a total super balance of $1.7m who contributes $220,000 in 2023/24 and uses the 2-year bring forward rules is still capped at $220,000 – they don’t get to increase this to $230,000 ($110,000 for 2023/24 + $120,000 for 2024/25).

Conclusion

The recent AWOTE announcement brings significant opportunities for Australians to enhance their superannuation contributions starting from 1st July 2024. With increases in both concessional and non-concessional caps, individuals have more flexibility to save for retirement while reducing their taxable income. However, for those already in a bring-forward period, these changes won't apply until their current period ends. At PlanWise Paraplanning Services, our paraplanner financial planning experts can help you navigate these new thresholds and maximize your retirement savings strategy effectively. Reach out to us for personalized support on your superannuation planning.

To find out more about our services or to get in touch, feel free to reach out at info@planwiseservices.com.