In exciting news the Federal Government has announced superannuation contribution caps will increase on 1 July 2024.
The increase in caps will enable people to further maximise the growth potential of their hard earned retirement savings in the lead up to retirement.
From 1 July 2024, theĀ concessional contribution cap will increase from $27,500 to $30,000 andĀ the non-concessional cap will increase from $110,000 to $120,000.
So what is a contribution and what is the difference between the two?
- In the superannuation context, a contribution is anything of value that increases theĀ capital of a superannuation fund.
- AĀ concessional contribution (often referred to as pre-tax contributions) are payments made into a super fund fromĀ pre-tax income. Super Guarantee from employers are an example of a concessional contributions. Concessional contributions are taxed at 15% by the super fund. All concessional contributions are part of the taxable component of superannuation.
- AĀ non-concessional contributionĀ (often referred to as after-tax contributions) are payments made into a super fund fromĀ after-tax income. Spouse contributions are an example of a non-concessional contribution. Non-concessional contributions are not taxed by the super fund. All non-concessional contributions are part of the tax free component of superannuation.
Disclaimer
It is important you discuss contributions with your tax agent and financial adviser to ensure your situation is reviewed and contribution suitability and affordability is discussed.
Regards,
The team at Premier Financial Planning & Investment Services.
