Mandated changes: Compulsory Employer Superannuation

From 1 July 2024, Australian employees can anticipate a boost to their superannuation savings as the superannuation guarantee increases. Employers will be mandated to contribute 11.5% of an employee’s annual salary into their super account, up from the previous rate of 11%. Alongside this, both concessional and non-concessional contributions caps will rise, offering individuals more flexibility in growing their retirement funds.

Effective from 1 July 2026, employers will be required to align super payments with employees’ salary and wages, streamlining payment processes and reducing instances of unpaid super. This move aims to reduce the $5 billion annual shortfall in unpaid super while fostering better compliance and faster compound growth for beneficiaries.

Contribution Caps

From 1 July 24, the concessional contributions cap will increase to $30,000, allowing individuals to contribute more tax-effectively to their super accounts. Similarly, the non-concessional contributions cap will climb from $110,000 to $120,000 annually, increasing the 3 year limit forward to $360,000, contingent upon one's total super balance. This rule enables individuals to expedite their retirement savings by consolidating up to three years' cap of after-tax contributions into a single year.

Proposed Future Reforms

Div296 – proposed tax on super balances over $3m

Looking ahead, a reform currently before Parliament, is the proposed Division 296 tax. The Government is seeking to reduce tax concessions available to individuals with superannuation balances greater than $3million. This legislation if passed, will result in an additional 15% tax on earnings for super balances greater than $3million and will commence on 1 July 25. Tax on earnings of superannuation balances below $3million remain unchanged and will continue to be taxed at the current concessional rates of up to 15%.

Super Contributions on Government-funded Paid Parental Leave

Furthermore, legislative proposals to pay superannuation on the government-funded Paid Parental Leave (PPL) from 1 July 2025 which will be administered by the ATO. [SB1]?Notably, superannuation contributions on government-funded PPL of 12%, aims to normalise parental leave entitlements, promoting gender equality and economic security for women.

These developments signify a concerted effort to bolster Australia's retirement savings landscape, with measures tailored to support individuals, families, and small businesses alike. As these changes unfold, seeking guidance from your Boyce advisor and superannuation specialists alike will support you to make informed decisions to maximise their retirement benefits and secure their financial future.

For more information, please reach out to your local Boyce advisor.