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With each May comes another Federal Budget, and our quick guide to what’s on the cards for superannuation.

As the cost of living is top of mind for many Australians, this year’s Budget focused on easing financial pressures, however there were also a few proposed measures around super. There are also a couple of previously announced changes to super that will be taking effect on 1 July 2024.

Here’s your guide to what you need to know:

Federal Budget measures

Paying super on Paid Parental Leave

The Government has proposed paying superannuation to parents on government-funded paid parental leave. The measure will apply for parents of babies born or adopted on or after 1 July 2025.

This measure had been previewed several months ago, in tandem with the Government’s announcing it would look to expand the paid parental leave scheme to 26 weeks.

With statistics showing that women retire with less super than men, this is a measure that has long been lobbied for. One of the key reasons for the retirement savings gap is the time women take out of the workforce, and the reduced working hours many may then return to, to have and take care of children.

Fair Entitlements Guarantee Recovery Program

The Government has announced the expansion of the Fair Entitlements Guarantee Recovery Program, which helps the employees of companies in liquidation or bankruptcy pursue unpaid wages, leave, and other entitlements, to include unpaid superannuation from 1 July 2024.

Industry and administrative funding

The Government has also announced proposed funding for several measures aimed at improving various administrative super functions.

For example, SuperStream Gateway  Network Governance Body, an industry-owned not for profit organisation, will receive proposed funding to manage the integrity of the Superannuation Transaction Network, which allows industry members to transmit contribution data between employers and superannuation funds.

Proposed funding will also be provided to increase the Productivity, Education, and Training Fund. This funding will help prepare employers to implement various changes, such as the introduction of payday super, which mandates that super contributions be made at the same time that wages are paid.

What’s changing on 1 July 2024

While the measures proposed in the Budget may take some time before they come into place, there are a few other planned changes coming into effect on 1 July 2024 to know about:

The Superannuation Guarantee percentage is increasing to 11.5 percent

The Superannuation Guarantee (SG) – the money that your employer must contribute to your super on your behalf – will increase by 0.5 percent for the fourth year in a row to reach 11.5 percent on 1 July 2024.

This is the penultimate planned increase, with one more to come on 1 July 2025 to bring the SG to 12 percent.

The increase is designed to ensure that our super balances keep up with the cost of living by the time current employees reach retirement, so they can enjoy a comfortable retirement.

Contribution caps are increasing

There are limits to how much you can contribute to your super each year. These limits, or caps, have changed a couple of times over the last few years through indexation, and will be changing again on 1 July 2024.

Concessional contributions

Concessional contributions are also known as pre-tax contributions, and include the contributions your employer makes on your behalf, any salary sacrifice contributions, and any contributions you claim a tax deduction for.

Here’s how the cap has changed over the last few years:

  • Between 2017/18 – 2020/21: $25,000 per year
  • Between 2021/22 – 2023/24: $27,500 per year
  • From 1 July 2024: increasing to $30,000 per year

It’s important to note that there may be specific rules for your division about concessional contributions – you can learn more about what rules apply to you here.

Non-concessional contributions

These are contributions made from your after-tax salary. You can make this type of contribution via BPay, or you can arrange with Payroll for a portion of your after-tax salary to go into your super.

Here’s how the non-concessional cap has changed:

  • Between 2017/18 – 2020/21: $100,000 per year
  • Between 2021/22 – 2023/24: $110,000 per year
  • From 1 July 2024: increasing to $120,000 per year
Government co-contribution lower and upper thresholds are increasing

The government makes super co-contributions of up to $500 to help low- and middle-income earners boost their super.

If you earn less than $60,400 a year in the 2024/25 financial year and make after-tax contributions (also known as non-concessional contributions) to your super, the government will co-contribute up to 50 cents in the dollar, and up to a total of $500, to your super. The amount that the government will contribute will decrease the more you earn above the lower threshold of $45,400.

These lower and upper thresholds are increasing from $43,445 and $58,445 respectively in 2023/24.

The quarterly maximum super contributions base is increasing

Employers are required to contribute 11 percent (increasing to 11.5 percent on 1 July 2024) of an employee’s ordinary time earnings to their super account. However, the government has a limit on employers having to make contributions on earnings above a certain dollar amount – this is called the maximum super contributions base.

In 2023/24, this maximum was $62,270 per quarter – this means that employers don’t need to make contributions on any quarterly earnings above this amount. This amount will increase to $65,070 per quarter in the 2024/25 financial year.

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