2024/25 Key Super Thresholds – The Details

1. Concessional Contribution Cap - $30,000 (previously 23/24 financial year was $27,500)

Concessional contributions are superannuation contributions in respect of which a tax deduction has been claimed whether those contributions are made by the employer (or a related company of the employer) of the member or by the member themself. These contributions are subject to tax in the super fund at 15%.

The cap applies to the aggregate of all concessional contributions made by or in respect of the member during the financial year. If the aggregate of the concessional contributions exceeds the cap, the excess amount will be taxed as assessable income of the member’s tax return at the member’s marginal tax rate for the financial year in which the contributions were made (with a tax offset of 15% of the amount of the excess). The 15% offset is provided as the excess amount has already been taxed at 15% when received by the super fund.

The member will also have to pay an excess concessional contribution charge on the excess amount – this charge is to reverse any timing advantage gained by the claiming of a tax deduction in respect of the excess amount.

The member has a choice as to whether the excess amount remains in the super fund or be returned. The former election will result in the excess amount being treated as a non-concessional contribution for the financial year in relation to which the excess amount arose. One consequence of this election is the member will have to pay the tax liability arising from the inclusion of the excess amount from non-super money. Another consequence is that member may have triggered the application of the bring forward of non-concessional contributions.

The latter election will entail 85% of the excess amount being paid to the ATO, used by the ATO to pay the tax liability and excess concessional contribution charge with the balance being paid to the member. The amount paid to the member does not give rise to a tax liability in the hands of the member. This election results in the excess concessional contributions amount being removed from the super system.

2. Non-Concessional Contribution Cap - $120,000 (previous 2023/24 financial year was $110,000)

Non-Concessional Contributions are superannuation contributions in respect of which no tax deduction has been claimed or cannot be claimed. Typically, such contributions are made by members for themselves. Additionally, excess concessional contributions which are retained in the super system are counted as non-concessional contributions. These contributions are not subject to tax in the super fund.

Unlike concessional contributions, eligibility to make non-concessional contributions depends on the attained age of the member and their total superannuation balance. To make non-concessional contributions the total superannuation balance of the member immediately before the financial year in which the contribution is made must be less than the general transfer balance cap (which for 2024/25 financial year is $1,900,000). Additionally, the member must not have attained age of 75 or more. If either of these requirements are not satisfied, the member cannot make non-concessional contributions.

However, certain types of superannuation contributions which would otherwise be non-concessional contributions are expressly excluded as being non-concessional contributions. These special types of non-concessional contributions include downsizer contributions, CGT contributions, personal injury contributions and Government co-contributions.

The cap applies to the aggregate of all non-concessional contributions made by or in respect of the member during the financial year. If the aggregate of the non-concessional contributions exceeds the cap, the excess amount will be taxed at 47%. This tax is a tax liability of the member, treated as excess non-concessional contributions and taxed at 47%.

The member can avoid the 47% tax liability on the excess amount in one of two methods.

a) The first method is for the “bring forward” of non-concessional contributions to apply to the member. However, there are certain restrictions as to when a bring forward will apply. The bring forward of non-concessional contributions is set out in detail below.

b) The other method for a member to avoid the 47% on their excess non-concessional contribution is by electing to withdraw the excess amount plus 85% of the associated earnings from the super system. In this case, the excess amount is reduced to nil (so there is no 47% tax) and 100% of the associated earnings are included in the member assessable income for the financial year in which the excess amount arose with a 15% tax offset of the associated earnings. Associated earnings are the investment earnings which have deemed to arise in respect of the excess amount and the associated earnings are determined by a statutory rate of return. The statutory rate of return for 2023/24 financial year is 11.19% pa.

3. Bring forward (non-concessional contribution) Cap - $360,000 (previous 2023/24 financial year was $330,000)

In brief outline, the bring forward permits a member to make up to three years’ worth of non-concessional contributions in one or two financial years. However, whether the Bring Forward Cap applies depends on the total superannuation balance of the member immediately before the start of the current financial year and, also, depends on the attained age of the member at the start of the financial year in which the contribution is made.

In general, Non-Concessional Contributions cannot be made after the member attains age 75.

4. Transfer Balance Cap - $1,900,000 (no change to previous cap)

The Transfer Balance Cap has not been increased for the 24/25 financial year.

The Transfer Balance Cap has two functions:

I. To act as a cap on the amount of non-concessional contributions which can be accepted for or in respect of a member
II. To limit the amount of superannuation which can be transferred to earnings tax exempt (retirement) phase.

5. CGT Cap Amount - $1,780,000 (previous 2023/24 financial year was $1,705,000)

This cap is a lifetime cap which applies to contributions made by a member for their benefit where the contribution is sourced (directly or indirectly) from a small business capital gains tax being either the 15-year concession or the retirement concession.

While these payments are not subject to the total superannuation balance requirement and can be made even if the total superannuation balance exceeds $1.9m, once made they will form part of the total superannuation balance (and so affect the amount of non-concessional contributions which can be made in subsequent financial years). Additionally, these contributions are subject to the transfer balance cap so that they do not increase the amount which can be transferred into retirement phase.

Even if a member has previously made $1,705,000 of CGT contributions (the dollar value for 2023/24 financial year), the member is entitled to make further CGT contributions up to the dollar value of the increase in the cap, which is $75,000.

CGT contributions cannot be made after the member has attained age 75.

6. Division 293 Tax Threshold - no change, this threshold remains at $250,000

Division 293 is tax (separate from income tax) imposed on members whose adjusted taxable income (including Super Guarantee contribution) exceeds $250,000. Division 293 tax is 15% and is imposed on the member. The tax is applied to the amount of concessional superannuation contributions which causes the member’s adjusted taxable income to exceed $250,000. Consequently, Division 293 tax is applied to the lesser of the amount of concessional contributions and the amount by which the member’s adjusted taxable income exceeds $250,000.

In general terms, adjusted taxable income is the member’s taxable income for the financial year adding reportable fringe benefits, reportable superannuation contributions, total net investment losses.

7. Low Rate Cap Amount - $235,000 (previously $230,000)

This is a cap on the amount of taxable components (taxed and untaxed elements) of a superannuation lump sum payment which can receive:

•  a nil rate rather than a 15% (taxed elements) or
•  a lower rate of 15% rather than 30% rate (untaxed elements)

This cap only applies to superannuation lump sum payments made to a member who has attained their preservation age and is less than age 60.

8. Preservation Age and Pension Drawdown Rates

There are no changes to either the Preservation Age or to the age related pension drawdown rates.