The delivery of the 2024-2025 Federal budget announcement included a number of changes to the superannuation system, but none were unexpected. The main theme of the changes in relation to superannuation is enhancing retirement savings to allow individuals a more dignified retirement. The key superannuation changes included in the budget include the following. It should be noted that besides the changes to the contribution caps and the increase in the SGC rate, the other items aren’t legislated at this stage.
Increase In the Superannuation Guarantee Rate
From 1 July 2024 the SGC rate will move to 11.5% with the previously proposed increase in the SGC rate to 12% from 1 July 2025 remaining on track, with no changes being proposed.
Increase in the Contribution Caps
As expected, the government has announced an increase in the maximum superannuation contribution limit. From 1 July 2024, the annual Concessional Contribution Cap for eligible individuals will be raised to $30,000 per annum which in turn means an increase of the Non-Concessional Cap to $120,000 per annum and the increase to $360,000 for members wanting to utilise the Bring Forward Contributions.
It should be noted, however, that for members that have already triggered their bring forward contributions prior to 1 July 2024 then, the existing cap of $330,000 will still apply to those members until their 3-year term has lapsed.
Superannuation on Paid Parental Leave
The Government has confirmed the introduction of the super guarantee rate of 12% to be paid on the Government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025. Those eligible will receive this additional payment as a contribution to their superannuation fund. Payments will be made annually to individuals’ super funds from 1 July 2026. This aims to reduce the impact on the superannuation balances of those individuals taking time out of the workforce to care for young children.
Strengthening Tax Compliance – ATO Counter Fraud Strategy
The government has announced it has committed $187 million over the next four years, which will commence on 1 July 2024, to assist the ATO in combating fraud within the tax and superannuation systems. The aim is to enhance the ATO’s technological capabilities, with $78.7 million allocated specifically to upgrade the information and communications technologies. These technological enhancements should enable the ATO to detect and block suspicious activities quicker and easier and reduce fraudulent activities.
Payday Superannuation & Super Stream
As previously announced, starting on July 1, 2026, employers must pay superannuation while paying employees’ salaries and wages. The main aim of this introduction is to enable employees to have better visibility and control over their superannuation entitlement. In addition, this should assist the ATO in recovering unpaid superannuation. The budget has allowed the ATO $40.2 million to improve its ability to match data and act against cases where super has failed to pay or even underpay employees.
DIV 296
Unfortunately, the handing down of the 2024 budget failed to see any changes to the proposed Div 296 legislation, which is set to commence from 1 July 2025, with the first amount of tax being due on the lodgement of the 2025/26 financial year return.
Legacy Pensions
SMSF Association CEO Peter Burgess said it was disappointing that the government did not recommit to the legacy pension amnesty originally announced in the 2021 budget.
“We were hoping to see more detail on how reserves would be treated under that type of amnesty, as it was an unanswered question in 2021,” he said.
“It is important that these pension members can restructure their pensions before the proposed new super tax as the way it is applied to these pensions is going to be easy.”
Burgess said the association did have a technical manager in the budget lock-up who was told that the amnesty was still on the agenda.
In conclusion, the Australian 2024 budget release in relation to the superannuation changes is aimed at providing a more dignified retirement for retirees and empowering Australians to take control of their retirement savings and ensure a more secure financial future.
How can we help?
If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2024-25 Federal Budget, please feel free to contact us on 1300 362 943 or admin@intello.com.au to arrange a time to meet so that we can discuss your particular requirements in more detail.