Super EOFY 2024 Update

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Super Update

SMSF to-do list prior to 30 June 2024

As the financial year is almost over below a few reminders to ensure you have completed your super to-do list.

All super contributions must be banked into your super fund before 30 June 2024 to be counted as a contribution for this financial year. Below are the most common types of contributions.

Concessional Contributions

  • Concessional contribution cap (before tax contribution) is $27,500;
  • Must be received by the fund prior to 30 June 2024; and
  • Can consist of any combination of;
    • employer super guarantee,
    • salary sacrifice arrangements, or
    • member deductible contributions.

 

It is recommended that contributions be banked no later than 25th of June 2024 to ensure they are counted towards the FY ended 30 June 2024.

After the age of 75, only compulsory mandated contributions can be contributed.

The employer super guarantee rate will increase to 11.5% effective 1 July 2024.

The concessional contribution cap will increase to $30,000 effective 1 July 2024.

 

Member deductible contributions

In order for an individual to claim a member deductible contribution the following conditions must be met:

  • Ensure there is enough assessable income to claim the deduction, if not, the contribution will be treated as a non-concessional contribution,
  • Complete the notice of intent to claim a deduction (S290-170 Notice) and receive an acknowledgement of receipt of the notice from the fund within the required time frame, and
  • Pass the work test (outlined below) if aged between 67 and < 75.

 

Unused carry forward concessional contributions

Catch up of unused concessional contribution caps are available if certain criteria are met.

This will allow you to make concessional contribution deductions in excess of the general $27,500 cap by including any unused concessional contribution caps available to you since 30 June 2019.

The eligibility criteria to make carry-forward concessional contributions are as follows:

  • Your total superannuation balance (TSB) must be less than < $500,000 as at 30 June 2023.
  • For the FY ended 2024 if the member is < 67 years of age ; no work test is required.
  • If aged between 67 but < 75 years of age; must pass the work test if claiming a member deductible contribution.
  • Carry-forward concessional contributions can be made via a salary sacrifice arrangement and/or as a member deductible concessional contribution.
  • Must have enough personal income to claim the member deductible concessional contribution.

If this is of interest, please contact us as there are other factors that need to be considered to ensure you don’t inadvertently exceed your concessional contribution caps.

 

Non-concessional contributions

The non-concessional contribution cap (after tax contribution) is $110,000 per annum or $330,000 bring forward provision (see below for further details).

Eligibility criteria include the following:

  • You have not triggered the bring forward provisions in the prior two years.
  • Your TSB across all superfunds as of 1 July 2023, is < than $1.9 million.
  • If < 75 years of age, the work test no longer applies.
  • If your TSB in excess of $1.9 million as at 30 June 2023, you cannot make any further non-concessional contributions.

 

Effective 1 July 2024 the non-concessional cap will increase to $120,000 per annum or bring forward $360,000 over a three-year period.

Careful timing around triggering a bring forward provision should be considered in light of the new caps.

 

Bring forward non-concessional contributions.

Individuals < 75 years of age may be able to utilise the full bring forward non-concessional provisions if they have not previously triggered the bring forward provision in the last two years and their TSB (across all superfunds) is less than $1.68 million.

 

Total Superannuation Balance at 1 July 2023 < $1.9 M Balance

Due to the recent indexation, the maximum general TSB has increased to $1.9 M, therefore more people will be eligible to make non-concessional contributions than before.

As a result of the increase, you may want to consider the timing of making any bring forward non-concessional contributions before 30 June 2024.

As an example, depending on your personal circumstances, you may make $110,000 now and $360,000 after 1 July 2024.

 

2023/2024 bring forwards eligibility.

Total Superannuation Balance   

             (at 30 June 2023)

Bring Forward

Amount

Bring Forward

Period

Less than $1.68 million $330,000 Three years
$1.68 million to less than $1.79 million $220,000 Two years
$1.79 million to less than $1.9 million $110,000 No bring forward
$1.9 million and above $0 N/A

 

2024/2025 bring forward eligibility.

Total Superannuation Balance   

             (at 30 June 2024)

Bring Forward

Amount

Bring Forward

Period

Less than $1.66 million $360,000 Three years
$1.66 million to less than $1.78 million $240,000 Two years
$1.78 million to less than $1.9 million $120,000 No bring forward
$1.9 million and above $0 N/A

 

Note -If you have entered into a bring forward arrangement prior to 30 June 2024, you cannot use the above table. Once a bring-forward arrangement is triggered in a financial year you are limited to the general TSB at that time, that is $1.9 M if entered after 1 July 2023, $1.7 M if entered after 1 July 2021 or $1.6 M if entered prior to 30 June 2021.

 

Age and the work test- for member deductible contributions

The work test will only apply for those aged between 67 and 75 years of age, wanting to make a member deductible concessional contribution.

The work test requires an individual to be gainfully employed for at least 40 hours over a continuous 30-day period, in the financial year in which the contributions are made.

Gainfully employed would not cover passive income such as dividends, rental, or volunteer charity work.

If you are unsure how this may impact you, please contact us.

Where an individual is turning 75 years of age during the year, contributions must be received no later than 28 days after the end of the month in which the individual turns 75.

From the age of 75 onwards – a member can only make mandated employer and downsizer contributions.

 

Recontribution strategy – $3 Million balance

For a couple that have one member whose member’s balance in excess of $3 M and the other under $1.9M, it may be worth considering a recontribution strategy.

Certain criteria will need to be met, such as meeting a condition of release; we can assist you in this if this is of interest.

 

Transfer Balance Cap and income stream (pension)

Please ensure you have withdrawn the minimum income stream requirement in the form of cash prior to 30 June 2024. It is recommended that this be completed by 25 June 2024.

Failure to withdraw the minimum income stream or a pro-rata amount (prior to a full commutation) could result in the fund losing its tax exemption on the income supporting the pension account.

The Transfer Balance Cap (TBC) is the maximum amount you may commence an income stream with. When you commence an income stream you will have a transfer balance account (TBA).

Each member has their own personal TBC that will range between $1.6 million and $1.9 million, depending on whether they had previously commenced an income stream or not.

If you had commenced a retirement phase income stream prior 1 July 2023, your personal TBC would have been between $1.6 and $1.7 million. If you had not fully utilised your TBC, you would have a TBC balance available, from which you may commence a further income stream from. We can assist you in determining your available TBC and your eligibility to commence an income stream.

To calculate your minimum payment, multiply the percentage in the below table by your pension account balance at 1 July each year.

 

 Minimum Pension table

Age Minimum pension payment % of account balance
Under 65 4%
65-74 5%
75-79 6%
80-84 7%
85-89 9%
90-94 11%
95 or more 14%

 

If you are considering commencing an income stream on 1 July 2024, please contact us so we may prepare pension commencement documents and lodge a transfer balance account report with the Australian Taxation Office.

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The above summary is intended to be general in nature. Should you believe that any of the above matters may be relevant to you or your Group’s particular circumstances, please discuss the specific details with your Slomoi Immerman Partners advisor.

Find out what our team can do for you.