The 2023/24 Financial year is now upon us, and it brings with it some new changes to Superannuation, Account based pensions and Government benefits.
This is your 2023/24 Financial Year guide to legislation changes commencing 1 July 2023. As always please feel free to reach out to see how these changes might affect you.
- Age Pension
The Age Pension age threshold increases to 67 years of age. This will impact you if you were born on or after 1 January 1957.
- Superannuation Guarantee (Employer contributions) increase to 11%
The Superannuation Guarantee (SG) contribution rate i.e. Employer contributions, will increase to 11% from 1 July 2023 (and 11.5% from 1 July 2024), as part of the legislated gradual SG increase to 12% on 1 July 2025.
This is the amount of money that your employer is mandated to contribute to your Super fund as part of your salary package.
The annual Concessional cap is unchanged at $27,500 (actual CC cap may be higher if eligible for catch-up contributions).
Small business owners should review their systems to ensure that they are meeting their obligations to their employees based on the increased rate.
People with existing salary sacrifice arrangements or establishing one should review the amount to ensure they don’t exceed their Concessional cap of $27,500.
- Total Super Balance Thresholds Increased
The amount of money that you can contribute as a Concessional Contribution (deductable) Non-Concessional (non-deductable) has not changed. These remain at $27,500 and $110,000 respectively.
The ability to make non-concessional contributions will depend on your Total Super Balance (TSB) while is the amount of money that you have in the super environment on June 30 the prior financial year.
Table 1: NCC cap and TSB thresholds in 2023/24
|TSB at 30 June 2023||NCC Cap for 2023/24|
|$1.79 < $1.9m||$110,000|
|$1.68m < $1.79m||$220,000|
If you were over the allowable threshold to contribution in the prior financial year, you may now be able to contribute if your TSB is under $1.9m.
- Account Based Pension (Superannuation)
In a measure to help retirees relieve the pressure on their account-based pensions during Covid-19, the Government reduced the minimum pension requirement by 50% in between FY2019/20 and FY2022/23.
This reduction has not been renewed this year and minimum Pensions will go back to their normal rates.
The table below shows the minimum payment required in FY 2022/22 and from 1 July 2023.
Table 2 – Minimum Pension rates from 1 July
|Age||FY2022/23||From 1 July|
|65 – 74||2.50%||5%|
|75 – 79||3%||6%|
|80 – 84||3.50%||7%|
|85 – 89||4.50%||9%|
|90 – 94||5.50%||11%|
If you are now receiving more income from your account-based Pension that you require, speak to an adviser on possible strategies.
- Transfer Balance Cap (TBC) Increases
The General Transfer Balance Cap (TBC) is the amount of money that you re allowed to have in a Pension (tax-free) environment. This cap will increase from $1.7 million to $1.9 million. The Australian Taxation Office (ATO) highlights that this indexation will impact other areas of tax and superannuation, including the increase to $118,750 of the defined benefit cap (ATO 2023a)
This can have an impact on your plans for your super at retirement, whether you have savings in an accumulation account or defined benefit scheme. It’s also something to keep in mind when you’re looking at making extra personal contributions to your super.
If you have not previously maximised your TBC, this might allow you to get more money into the Pension environment, given that you have additional funds to available.
If you have waited to start a pension for the first time in this financial year, you will now have access to the full $1.9 million cap.
- Government Co-contribution
Government co-contribution stays at a maximum of $500. However, the income thresholds for eligibility will increase.
If you would like to discuss any of the above changes and how they may impact you, please feel free to contact our office on 07 3378 9681 or email@example.com.