Superannuation Opportunities for the 2023-24 Financial Year 💰📈
With the new financial year underway, it’s an opportune time for retirees to review their financial strategies for 2023-24, especially concerning superannuation. Here are some key superannuation opportunities to consider:
The pre-tax concessional contributions cap remains unchanged at $27,500. This allows you and/or your employer to contribute up to this amount before additional tax applies. If you accidentally exceed this cap, there’s no major penalty, but the excess will be taxed as regular income.
Employer’s Superannuation Guarantee (SG) Contribution
The employer’s compulsory SG contribution rate is now 11% from the first dollar earned. If you earn over $250,000 and receive SG contributions from multiple employers, you can request one employer to stop paying it to avoid breaching the cap, provided at least one employer continues to do so.
Personal Deductible Contributions and Salary Sacrifice
You can top up your super by making personal deductible contributions and arranging salary sacrifice contributions through your employer. For deductible contributions, you must provide a notice of intent to claim a tax deduction and have it acknowledged by your fund.
Work Test for Aged 67 to 74
If you’re aged 67 to 74 and want to make a personal deductible contribution, you must meet the work test, which requires 40 hours of gainful employment in 30 days. There’s a “work test exemption” for those who met the test in 2022-23 and had a total super balance below $300,000 at June 30.
Unused Concessional Contributions Cap
Any unused concessional contributions cap amounts since 2018-19 can be used, provided your total super balance was below $500,000 at June 30, 2023. This is the last year to utilize the unused cap amounts from 2018-19.
You can now split up to 85% of your concessional contributions made in 2022-23 with your spouse’s super. This allows for balancing balances, maximizing tax-free retirement phase amounts, or optimizing Centrelink means testing.
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The non-concessional contributions cap is $110,000. However, if your total super balance was below $1.68 million at June 30 and you’re under 75 on July 1, you may contribute up to $330,000. Check your contribution history from July 1, 2021.
To receive a $500 government co-contribution, your income must be less than $43,445 with at least 10% coming from employment or business, and you must be under 71. The co-contribution progressively reduces for incomes between $43,445 and $58,445.
If you sell a home owned for at least 10 years and are aged 55 or more, you may be eligible to make a “downsizer contribution” of up to $300,000, boosting your super even if you’re otherwise ineligible due to age or total super balance.
Retirement Phase Pension and Transfer Balance Cap
If you start a retirement phase pension for the first time, the transfer balance cap is now $1.9 million. For existing pensions, the cap will be proportionally indexed if not fully utilized.
Minimum Pension Drawdown Rates
The minimum pension drawdown rates are back to normal as the temporary reduction that applied for the past four years is not extended
It’s crucial to start planning early to take advantage of these opportunities and maximise your superannuation benefits in the coming financial year.
Being proactive in what you can do within your superannuation is important because it provides greater financial stability, reduces reliance on government assistance, offers flexibility, and allows for better control of your finances during retirement. In other words, it empowers you to enjoy your retirement years with confidence and independence while contributing to the sustainability of social safety nets.