Lower Your Taxes With The July 1 2024 Super Contributions Cap Increase

If you feel you might be paying too much tax, then you probably are.

And if that’s you, you’ll love this new announcement from the ATO about the super contribution cap 2025.

Starting from July 1, 2024, you’ll be able to contribute more to your super. Here’s how you can take full advantage of this change.

What’s Changing in the 2025 Financial Year?

The deductible amount you can put into your superannuation account (super cap) is going up.

If you put money in before taxes (concessional contributions), the limit is increasing from $27,500 to $30,000.

If you’re putting in money after taxes (non-concessional contributions), the limit is going from $110,000 to $120,000.

Who Benefits From the Super Cap Increase?

This change benefits everyone who can afford to put money into their super.

It’s most useful to those who’ve had a windfall, a good year, or a profitable exit last year.

How Super Contributions Affects Taxes

You may be able to claim a tax deduction on personal super contributions that you make.

Super contributions before taxes are taxed at a lower rate of 15% in most cases.

Meaning, if you put more of your income into your super, you can pay lower taxes this year.

Even better, when you retire, you might not have to pay taxes on the money you take out.

So, if your business has had a good year, or you’ve sold your business recently – you can use this to lower taxes.

3 Creative Ways To Lower Your 2024 taxes Using your Super

Timing your Contributions

Super contributions can also affect other taxes you owe, and not just income tax.

For example, you can use super contributions to lower your capital gains tax.

So, if you’ve sold an asset, or inherited a large amount this year, you can put the money into your super and lower your taxes.

There are some rules and restrictions around doing this, so check with your accountant first.

Using ‘Catch-Up’ Contributions

If you’ve been contributing less than the limit in the last 5 years, then you can make extra contributors this year.

This is only applicable if your current super balance is under $500,000.

So, for example, if you contributed $15,000 before taxes last year, you could contribute up to $42,000 this year. (That’s $12K remaining limit from 2023 + $30K in 2024) 

It’s important to note the limit for catch up contributions is 5 years. Any unused limits from 2018-19 will expire unless you use them this year.

Important Retirement Restriction

While contribution limits are going up, there’s a cap on how much you can transfer into a tax-free retirement account.

This cap stays the same at $1.9 million for 2024.

Paying deductible contributions in advance

This only available to members of Self-Managed Superannuation Funds and there are a few compliance issues that need to be addressed. Talk to us for more information to see if this option is available to you.

Pay the Least Tax with The Least Effort

More than anything else, the July 1 super cap increase presents a chance to grow your retirement savings.

By maximizing your contributions, you lower current and future taxes, and put more away for your retirement.

And on that note, are you on track for your retirement?

Are you putting enough away? Are your savings structured to reduce retirement and post-retirement taxes?

We’ll do your tax returns, filing and deal with the ATO and also find every deduction you deserve. So you have more money to spend, save, and invest.

If you’re not sure, we can help. Get in touch for a free consultation.