Today’s announcement of the November AWOTE figures means we now know exactly what the thresholds and caps for 2024/25 will be.
And the fact that contribution caps will increase while the general transfer balance will not creates some interesting quirks we haven’t seen before.
The current regime for concessional and non-concessional caps was introduced back in 2017 when – for the first time – non-concessional contribution caps were linked to the size of a member’s total super balance.
Since contribution caps are linked to wages (rather than inflation) they have increased very slowly since then – in fact, only once (1 July 2021).
Back then, both the contribution caps and transfer balance cap increased at the same time so the adjustments to the table of non-concessional contribution thresholds for those looking to use the “bring forward” rules made perfect sense (and all the numbers went up).
From 1 July 2024, we will see an increase in the concessional contributions cap from $27,500 to $30,000. Since the non-concessional contributions cap is 4 x this limit, it will increase from $110,000 to $120,000 (or $240,000 and $360,000 for those using the bring forward rules).
However the fact that the general transfer balance cap (which is based on inflation instead) won’t increase means we have some interesting changes.
|
Current thresholds and caps (2023/24) |
Next year’s thresholds and caps (2024/25) |
||
|
TSB at 30 June 2023 |
Maximum NCC Cap |
TSB at 30 June 2024 |
Maximum NCC Cap |
|
$1.9m or more |
$nil |
$1.9m or more |
$nil |
|
$1.79m – less than $1.9m |
$110,000 |
$1.78m – less than $1.9m |
$120,000 |
|
$1.68m – less than $1.79m |
$220,000 (2 years) |
$1.66m – less than $1.78m |
$240,000 (2 years) |
|
Less than $1.68m |
$330,000 (3 years) |
Less than $1.66m |
$360,000 (3 years) |
(Of course, it’s important to remember that people who are already in the middle of a bring forward period don’t immediately step up to the new limits – more on that later.)
Something notable about this next change is that the thresholds for the bring forward rules (the left hand column for each year) will actually go down next year – meaning those hovering around a threshold will find it slightly harder to make sure they’re eligible. For example, someone wishing to initiate a three year bring forward period this year needed to have less than $1.68m in super at 30 June 2023. The equivalent threshold is lower at $1.66m at 30 June 2024.
This happens because of the way the numbers in the table are calculated. They are all based on the general transfer balance cap ($1.9m) less 1 or 2 years’ worth of non-concessional contributions.
For example, $1.66m at 30 June 2024 is $1.9m less 2 years’ caps ($240,000). The same calculation at 30 June 2023 was $1.68m ($1.9m less $220,000).
We didn’t see this back on 1 July 2021 because both the general transfer balance cap and the contributions caps went up at the same time.
They don’t get any benefit of the increase until that 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).