Important tax and super changes for FY25
The new financial year is underway and with it comes superannuation and tax changes that are likely to impact your employees. Here’s an overview of what’s happened from 1 July and some key super considerations.
Key changes
Tax cuts may boost take-home pay
The Government estimated that approximately 13.6 million taxpayers will pay less tax with the amended ‘Stage 3 tax cuts’ which took effect on 1 July. The table below illustrates the tax savings at different taxable incomes. Calculations are based on a Government calculator, which can be found at taxcuts.gov.au.
For many people, the tax cuts will provide much-needed cost-of-living relief. For others, the additional cashflow may allow them to consider options such as reducing debt, investing or topping-up super.
| Taxable income | Tax payable in 2023/24 | Tax payable from 1 July 2024 | Tax saving1 |
|---|---|---|---|
| $40,000 | $4,367 | $3,713 | $654 |
| $80,000 | $18,067 | $16,388 | $1,679 |
| $120,000 | $31,867 | $29,188 | $2,679 |
| $160,000 | $47,467 | $43,738 | $3,729 |
| $200,000 | $64,667 | $60,138 | $4,529 |
Super contribution caps have increased
From 1 July 2024, the concessional (pre-tax) and non-concessional (after-tax) annual contribution caps have increased as follows.
| Cap | In 2023/24 | In 2024/25 |
|---|---|---|
| Standard concessional contribution cap2 |
$27,500 |
$30,000 |
| Annual non-concessional contribution cap |
$110,000 |
$120,000 |
| Maximum non-concessional contribution under three-year bring-forward rule |
$330,000 |
$360,000 |
Total super balance thresholds that determine eligibility to make non-concessional contributions have changed
Total super balance thresholds that determine eligibility to make non-concessional contributions and use the bring-forward rules have reduced. To make a non-concessional contribution in 2024/25, your total super balance must be below $1.9 million 30 June 2024. However, to make larger contributions using the ‘bring-forward rule’ (which allows you to ‘bring-forward' your non-concessional contributions from a future year) your total super balance must be under certain thresholds.
For example, to trigger the three-year bring-forward in 2024/25, the total super balance must be less than $1.66m at 30 June 2024. The total super balance thresholds are found below.
| Total super balance at 30/06/2024 | Non-concessional contribution cap 2024/25 |
|---|---|
| $1.9m + |
$0 |
| $1.78m to < $1.9m |
$120,000 Annual cap only |
| $1.66m to < $ 1.78m |
$240,000 (Two-year bring-forward) |
| < $1.66m |
$360,000 (Three-year bring-forward) |
Contributions can generally be made if you are under age 75. More complex rules apply if you have used the ‘bring forward rule’ in the last two financial years. Your financial adviser can assist you with this.
Superannuation Guarantee rate has increased
The Superannuation Guarantee contribution rate increased from 11% to 11.5% on 1 July 2024, and will increase again to 12% from 1 July 2025. Also, from 1 July 2024, the quarterly maximum contribution base increased from $62,270 to $65,070. This is the maximum quarterly income amount on which Superannuation Guarantee contributions must be paid by your employer.
Preservation age increased to 60
The preservation age has increased from 59 to 60 on 1 July. This means the earliest that super may be accessed under ‘retirement’ has increased to age 60.
Other thresholds have gone up
Other key thresholds increased from 1 July, such as the income thresholds that determine eligibility for Government super co-contributions and the tax-free genuine redundancy amounts. These and other thresholds can be found at ato.gov.au (search for ‘Key super rates and thresholds’).
Other super considerations
- Superannuation Guarantee contributions for the April to June 2024 quarter were due by 28 July 2024. If these contributions were made to the super fund in July 2024:
- these are tax deductible in the 2024/25 financial year, even though the contributions relate to an employee’s ordinary time earnings in 2023/24, and
- these will count towards the employee’s concessional contribution cap in 2024/25.
- Salary sacrifice contributions may help eligible employees to increase the benefits of their tax savings in 2024/25. This is because salary sacrifice contributions are generally taxed in the super fund at 15%3 rather than to the employee’s marginal tax rate.
- Employers and employees need to ensure that salary sacrifice arrangements are entered into before the work is performed. Any salary, bonuses or entitlements that accrue before the arrangement is set up cannot be sacrificed into super.
_______________________________________________