Superannuation changes for 2024/25 financial year: What you need to know

The biggest change is that the limit on concessional contributions - the tax-deductible ones - is rising from $27,500 to $30,000 on July 1. This coincides with the changes in the tax rates. For example, if you earn $110,000 a year, a $27,500 tax deduction this year will save you $9487 in tax and Medicare levy. The same tax deduction after 30 June will save you only $8800. Obviously, if you have the money available it's better to make the concessional contribution before June 30. Just keep in mind that the $27,500 limit includes the employer contribution.

Next you need to think about catch-up concessional contributions. These enable you to make contributions now in excess of the $27,500 limit, which could be particularly effective in reducing capital gains tax. To use the catch-up contribution strategy, your super balance at June 30, 2023 must be less than $500,000. Only unused concessional contributions since the 2019 financial year can be used, and unused contributions for that financial year will expire this coming June 30, 2024.

The superannuation guarantee contribution - the employer contribution - will rise from 11 per cent to 11.5 per cent on July 1, which will boost your superannuation balance in the long-term. But take this opportunity to look at your asset allocation and make sure you are not in a too-conservative mix. This is also a good opportunity to review any salary sacrifice into super arrangements. How much you have when you retire, and therefore how long your superannuation will last, depends mainly on time, and the rate of return your fund can achieve.

Given that a major goal for retirees should be to retire debt-free, you should also check to see whether you are on track for this. If it is in doubt, boost your contributions if you can make the funds available.

Read more on The Senior:

Non-concessional contributions come from after-tax dollars and are currently limited to $110,000 a year. You can boost them by using the three year bring-forward rule, which means you could contribute $330,000 before 30 June, provided your total super balance at 30 June 2023 is under $1.68 million. If your super balance exceeds $1.9 million, no further non-concessional contributions are allowed.

The $110,000 limit will rise to $120,000 on 1 July, so a person with substantial funds who has not been making any non-concessional contributions could contribute $110,000 before June 30 and then $360,000 in the next financial year.

The preservation age is rising to 60 for everybody from July 1, 2024, which means 59-year-olds will no longer be able to access their super before 60. The good news is that anybody considering a transition to retirement strategy from that age will now be able to draw the income tax-free.

There are no changes to the downsizing contributions - the maximum of $300,000 a person still applies, and you can make only one downsizer contribution in your lifetime. However, a unique feature of these contributions is that you can make them irrespective of your age, or superannuation balance. This means the order in which you make contributions could be crucial. For example, if you had $1.6 million in superannuation and made a $300,000 downsizer contribution you would have reached your $1.9 million limit, and you could not make any more non-concessional contributions. If you made a $300,000 non-concessional contribution first, however, you could still make the downsizer contribution.

The transfer balance cap - the amount you can transfer to pension mode - remains at $1.9 million. But remember the original cap was $1.6 million when all the changes came in, and many people used up their cap then. Once you reach your cap, no more money can be transferred to pension mode, but there is still no limit on how much the money in pension mode can grow, which will happen if the earnings on your fund exceed the mandatory yearly pension withdrawals, and you leave that money to compound.

So take time to consider the changing rules and how best to work with them to optimise your superannuation outcomes, either side of this June 30.