Contribution caps for superannuation will increase from 1 July, but the lack of indexation of the general transfer balance cap (TBC) this year will result in a slight decrease in total super balance (TSB) thresholds that apply when determining eligibility to use the contribution bring-forward rule.
The increase in average weekly ordinary time earnings (AWOTE), which rose 4.5 per cent for the year to November 2023 – well above the 0.07 per cent needed to index the caps – will cause the concessional contribution (CC) cap to increase from $27,500 to $30,000 and the non-concessional contribution (NCC) cap, which is four times the CC cap, to rise from $110,000 to $120,000 from 1 July.
The latter increase will also cause the cap under the three-year NCC bring-forward limits to increase from $330,000 to $360,000 from 1 July.
Colonial First State technical services executive director Craig Day, though, emphasised the new limits would not apply to superannuation fund members who have triggered the bring-forward rule and are still within their bring-forward period.
“For these clients, their NCCs cap for the remainder of their bring-forward period will be based on their standard NCCs cap when they triggered the bring-forward rule (less their NCCs during that period),” Day told smstrusteenews.
“As a result, clients wanting to maximise their NCCs using the bring-forward rule may wish to consider restricting their NCCs this year to $110,000 or less so they do not trigger the bring-forward rule this year.
“They could then make an NCC of up to a maximum of $360,000 on or after 1 July 2024, taking advantage of the increased cap provided that their TSB on 30 June 2024 is less than $1.66 million.”
The increase in the contribution caps follows the recent release of the December quarter inflation figures, which were not sufficiently high to increase the general transfer balance cap (TSB), which will remain at $1.9 million.
Day noted the increase of the former but not the latter meant TSB thresholds for the bring-forward NCC cap will decrease by up to $200,000.
He pointed out the $1.68 million TSB threshold that applied to the three-year bring-forward period will fall to $1.66 million and the $1.79 million threshold will drop to $1.78 million, while the $1.9 million threshold will remain unchanged.
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