What new super and tax rules mean for you
Read about how superannuation and tax changes that came into effect on 1 July could boost your savings.
By Isatu Kpaka - 3 min read
A little about Isatu
As a Member Solutions Consultant at Russell Investments, Isatu Kpaka understands all the ins and outs of super and retirement legislation, and loves to answer questions and help members.
If you’ve noticed a change in your take-home pay since July, that’s likely because of adjustments to superannuation and tax that came into force at the start of the 2024 financial year.
The updates could open new opportunities for you to save and improve your long-term financial position. Here are some of the key changes:
Need to know
Compulsory super rate increased
From July 1, 2024, the superannuation guarantee rate increased to 11.5% from 11%. It’s legislated to increase again on 1 July 2025 to 12%.
Super guarantee payments you receive from your employer are calculated as a percentage of your ordinary pre-tax earnings and are paid by your employer directly into your superannuation account.
A 0.5% increase may seem like a small amount—for reference that equates to $500 for the year if you’re earning $100,000—but it all adds up and will compound over time, meaning you’ll likely have quite a bit more at retirement.
| Period | General super guarantee (%) |
|---|---|
| 1 July 2023 – 30 June 2024 | 11.0 |
| 1 July 2024 – 30 June 2025 | 11.5 |
| 1 July 2025 – 30 June 2026 and onwards | 12.0 |
Source: ATO
Tax cuts in action
While more of your pay will be directed into your super account, income tax rates have been reduced, so you may also receive more tax-home pay (after-tax and employer super contributions) than you did in the previous financial year.
The tax cuts mean that someone with an annual taxable income of $84,000 will pay $1,779 less tax in the 2024-25 financial year than in 2023-24. Someone earning $44,100 will pay $777 less tax, while a higher income earner on an annual salary of $140,800 will pay $3,729 less tax.
| Thresholds in 2023–24 ($) | Rates in 2023–24 (%) | New thresholds in 2024–25 ($) | New rates in 2024–25 (%) |
|---|---|---|---|
| 0-18,200 | Tax free | 0-18,200 | Tax free |
| 18,201 - 45,000 | 19 | 18,201 - 45,000 | 16 |
| 45,001 - 120,000 | 32.5 | 45,001 - 135,000 | 30 |
| 120,001- 180,000 | 37 | 135,001- 190,000 | 37 |
| > 180,000 | 45 | 190,000 | 45 |
Source: taxcuts.gov.au
You could spend that extra take-home pay, or you could consider further boosting your super by making (or increasing) voluntary before-tax contributions to your super to improve your retirement balance. Adding just a few extra dollars on a regular basis can make a significant difference over the long run.
Extra assistance
Some other changes that may benefit your household that came into effect for this financial year include payments to help with power bills , a freeze on the cost of some Pharmaceutical Benefits Scheme medicines , and changes to the indexation of student loans under the Higher Education Loan Program .
Higher thresholds for super contributions
The caps on the amount you can contribute to your super each year (without incurring additional taxes) have also increased for the 2024 tax year.
Before tax-contributions
Also called concessional contributions, these include super guarantee payments made by your employer, personal contributions for which you claim a tax deduction, and amounts you salary sacrifice into your super.
In 2024-25, you can add up to $30,000 in before-tax amounts to your super account. That’s up from $27,500 last tax year.
There are also special arrangements that allow you to make catch-up contributions if you didn’t use all of your previous years’ allocations, dating back up to five years.
After tax-contributions
The maximum after-tax contribution you can add to your super has increased to $120,000 for 2024-25 from $110,000 the previous year.
As long as your total super balance is less than $1.9 million and you’re aged under 75, you can also bring forward up to two years of future after-tax contributions, allowing you to add as much as $360,000 for the three years.
These increased thresholds mean you can move more money into superannuation than in previous years, which might be relevant to you if you receive a windfall amount or inheritance, for example, or if you have surplus cash flow and are looking to increase your long-term savings.
Recent changes to superannuation, tax and other benefits highlight the importance of staying up to date. Even if your situation hasn’t changed, the rules do change from time to time. Keeping track of your finances can help you make the most of your superannuation so you can set yourself up for a more secure future.
Zest! recommends:
Power of compound interest
Like a snowball gaining size on a slope, compound interest helps your super balance gather momentum.
By Emma Barrett
Issued by Total Risk Management Pty Ltd ABN 62 008 644 353, AFSL 238790 (TRM) as trustee of Russell Investments Master Trust ABN 89 384 753 567. Nationwide Super and Resource Super are Divisions of the Russell Investments Master Trust. The Product Disclosure Statement (‘PDS’), the Target Market Determinations and the Financial Services Guide can be obtained by phoning 1800 555 667 or by visiting russellinvestments.com.au or for Nationwide Super by phoning 1800 025 241 or visiting nationwidesuper.com.au. Any potential investor should consider the latest PDS in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. Russell Investments Financial Solutions Pty Ltd ABN 84 010 799 041, AFSL 229850 (RIFS) is the provider of MyTracker and the financial product advice provided by GoalTracker Plus. General financial product advice is provided by RIFS or Link Advice Pty Ltd (Link Advice) ABN 36 105 811 836, AFSL 258145. Limited personal financial product advice is provided by Link Advice with the exception of GoalTracker Plus advice, which is provided by RIFS.
This communication provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. If you'd like personal advice, we can refer you to the appropriate person. This information has been compiled from sources considered to be reliable but is not guaranteed. Past performance is not a reliable indicator of future performance. To the extent permitted by law, no liability is accepted for any loss or damage as a result of reliance on this information. This material does not constitute professional advice or opinion and is not intended to be used as the basis for making an investment decision. This work is copyright 2024. Apart from any use permitted under the Copyright Act 1968, no part may be reproduced by any process, nor may any other exclusive right be exercised, without the permission of Russell Investments.