EOFY 2023/24: 4 big changes coming
The most wonderful time of the year is nearly here again: End of Financial Year. Ahh yes, EOFY 2023/24 is before us. And, with the end in sight, it’s time to take stock, get our financial house in order and ready for the new year before us.
With big changes coming to superannuation contributions and tax rates, read on for 4 things to know before we bid farewell to FY 2023/24 and greet 2024/25 with open arms.
Superannuation Contribution Cap Changes.
Concessional (before-tax) contributions cap is increasing.
It’s important to keep track of your concessional contributions so you don’t exceed contribution caps.
The concessional contributions cap is the maximum amount of before-tax dollars you can contribute to your super each year, without those contributions being subject to extra tax.
From 1 July 2024, the concessional contributions cap will increase from $27,500 to $30,000, keeping in line with the statistical measure of Average Weekly Ordinary Time Earnings (AWOTE).
Non-concessional (after-tax) contributions cap is increasing.
Like concessional contributions, it’s also important to keep track of your non-concessional contributions to avoid paying unnecessary tax. Non-concessional contributions are not taxed unless you exceed the cap.
From 1 July 2024, the non-concessional contribution cap will increase to $120,000 – up from $110,000 in years past.
Carry Forward Unused Concessional Contribution Cap Amounts from 2018/19.
For individuals looking to boost their retirement savings, the ability to carry forward unused concessional contribution cap amounts from previous years may present a valuable opportunity.
If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in future financial years.
Broadly speaking, you’re eligible to do this if:
- your total super balance is less than $500,000 at 30 June of the previous financial year
- you have unused concessional contributions cap amounts from up to 5 previous years.
It’s worth noting that unused cap amounts expire after five years.
So that’s all to say – if you’ve got some from FY 2018/19, it’s time to use them before you lose them.
Like all things super and tax, you should seek out advice from a qualified financial adviser before deciding if this strategy is suitable for you. There are also tax implications if you over-contribute. So get good advice before making a contribution to your super account.
Marginal tax rates are changing.
Understanding changes to marginal tax rates is essential for effective tax planning.
And you should be aware that from 1 July 2024, the following changes are coming:
- The 19% tax rate will decrease to 16%, providing relief for individuals in this income bracket.
- Likewise, the 32.5% tax rate will reduce to 30%, offering tax savings for those earning within this range.
- The income threshold for the 37% tax rate will increase from $120,000 to $135,000, benefiting individuals earning higher incomes.
- Furthermore, the threshold for the 45% tax rate will rise from $180,000 to $190,000.
Goodbye EOFY 2023/24.
Unsure how these looming tax and super contribution changes might affect you? We’re here to help.
As we roll into EOFY and prepare to farewell FY 2023/24, it’s time to chat to your advice team.
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