1. New Superannuation Guarantee Percentage
Starting 1 July 2024, the Superannuation Guarantee (SG) rate has increased from 11 per cent to 11.5 per cent. This increment is part of a phased plan, with the rate scheduled to reach 12 per cent on 1 July 2025. Employers are mandated to contribute the updated SG percentage to their employees’ superannuation accounts.
2. Increase in contribution caps
An increase in superannuation contribution caps brings good news to SMSF members as it provides more opportunities to grow your retirement savings.
Concessional contributions
From 1 July 2024, the annual cap for concessional contributions has increased to $30,000. This adjustment allows you to contribute more pre-tax income into your super and utilise a higher tax deduction in your personal tax return if you plan to do a personal concessional contribution.
Additionally, if your Total Super Balance (TSB) was below $500,000 as of 30 June 2024, and you didn’t use up your concessional contribution cap in prior years, you may carry forward unused cap space from the previous five financial years, enabling contributions beyond the $30,000 limit.
Non-concessional contributions
The non-concessional contributions cap has increased to $120,000 per year.
Additionally, if your Total Super Balance is below $1.9 million, you may consider a bring-forward arrangement to boost your super balance. Eligible individuals can contribute up to $360,000 over three consecutive years under this arrangement.
3. Legislation changes on Non-arm’s length expenditure (NALE)
The NALE legislative changes for SMSFs received Royal Assent in June 2024, taking effect on 1 July 2024, retrospectively applicable from 1 July 2018.
SMSF trustees must assess how these changes impact their funds and ensure compliance with the new regulations regarding non-arm's length general expenses. If you are concerned that your SMSF may have incurred non-arm’s length expenditure, or is at risk of incurring non-arm’s length expenditure, it is essential to review current arrangements and implement necessary changes.
4. Safe harbour interest rate rises for related-party Limited Recourse Borrowing Arrangements
For SMSFs utilising related-party Limited Recourse Borrowing Arrangements (LRBAs), trustees should anticipate an increase in the interest rate payable on these loans effective 1 July 2024. This adjustment aligns with the safe harbour terms established by the ATO under guideline PCG 2016/5.
For the 2024-2025 financial year, the interest rates are set at 9.35 per cent for Real Property and 11.35 per cent for Listed Shares or Units. Trustees with existing related-party LRBAs should review existing loan terms to consider any changes required.
5. SMSF Housekeeping
As you prepare for the new financial year, it’s an opportune moment to ensure your superannuation fund is in order. Consider these important estate planning questions:
- Do you have a death nomination in place for your superannuation fund? Have you reviewed it recently?
- Do you have a Will?
- Do you have an Enduring Power of Attorney (EPOA) in place?
Should you require assistance in reviewing your Estate Plan to ensure it includes all the necessary documentation, please don’t hesitate to reach out to your relationship partner.
Learn more about how our Superannuation and SMSF services can help you
The above information is provided as an information service only and, therefore, does not constitute financial product advice and should not be relied upon as financial product advice. None of the information provided takes into account your personal objectives, financial situation or needs. You must determine whether the information is appropriate in terms of your particular circumstances. For financial product advice that takes account of your particular objectives, financial situation or needs, you should consider seeking financial advice from an Australian Financial Services licensee before making a financial decision in relation to any of the matters discussed.
