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Contribution caps to increase
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BY AYTEN OZDER

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 said 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 said.

“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 TBC, 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.

“Advisers looking to recommend contribution strategies for clients that involve making an NCC of up to $110,000 in the lead-up to 30 June and then a larger NCC under the bring-forward rules next year should be mindful of the reduced thresholds and limit any NCCs made this year to ensure they do not cause a client to exceed one of these TSB thresholds on 30 June and therefore impact their ability to make larger NCCs next year,” he said.

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