WEEKLY E-MAIL

3 Jul 2023

WHAT’S NEW FROM 1 JULY 2023

By Sam Eley

Each new financial year brings with it changes to thresholds and legislations that may impact an individuals’ wealth accumulation strategy or retirement plan. Below we have summarised key thresholds that have and have not changed from 1 July 2024.

Super contribution caps

The super contribution caps will remain unchanged for the 2024 financial year, detailed below:

• Concessional Contributions – $27,500 per financial year
  • These include employer superannuation guarantee (SG) contributions and personal concessional contributions
• Non-Concessional Contributions – $110,000 per financial year, or $330,000 using bring forward rules
• Downsizer Contributions – $300,000 per person

From 1 July 2023 the employer SG amount will increase from 10.5% to 11%. These are the contributions that employers are required to pay on behalf of their employees.

Catch up concessional contributions

From 1 July 2023, any unused concessional contributions in the 2018/19 financial year will no longer be carried forward under catch up concessional contribution legislation.

This means the maximum amount that could be contributed to superannuation as a concessional contribution (assuming no concessional contributions made in the previous four financial years) is $132,500, where an individual meets other eligibility criteria.

Indexation of the Total Super Balance (TSB)

From 1 July 2023 the Total Super Balance threshold will increase from $1.7 million to $1.9 million. The TSB is used to determine an individual’s eligibility to make non-concessional contributions into superannuation, and contributions cannot be made once the TSB exceeds $1.9 million.

Indexation of Transfer Balance Cap (TBC)

From 1 July 2023 the Transfer Balance Cap will also increase from $1.7 million to $1.9 million. The TBC determines how much of an individual’s superannuation balance can be held in the tax-free pension phase of superannuation.

For individuals who have commenced a retirement phase income stream prior to 1 July 2023 and had not fully utilised their personal TBC, their personal TBC will be increased proportionately. For individuals who have previously maximised their TBC, there will be no increase to their TBC.

Minimum pension drawdowns

Over the past four financial years, including the year ended 30 June 2023, the Government had reduced the minimum annual payment required to be drawn from Account Based and Market Linked Pensions by 50% in response to the economic impact of the COVID-19 pandemic.

This 50% reduction will not be extended into the new Financial Year, so from 1 July 2023 the normal minimum drawdown rates will apply, as shown in the table below:

For further information about how surplus income may be utilised as a result of increased pension drawdowns, please read the June edition of our Trade Secrets newsletter.

Centrelink Age Pension thresholds

From 1 July 2023, many of the thresholds for determining eligibility for an Age Pension payment have been indexed as outlined below:

• The asset test threshold to be eligible for the full Age Pension payment has increased from $280,000 to $301,750 (single homeowner) and from $419,000 to $543,750 (homeowner couple)
• Eligibility for a payment will cut off when assessable assets exceed $656,500 (single homeowner) and $986,500 (homeowner couple)
• The income test threshold to be eligible for the full Age Pension payment has increased from $190 per fortnight to $204 per fortnight (single) and from $336 per fortnight to $360 per fortnight (couple)
• Eligibility for a part Age Pension payment will cut off when assessable income exceeds $2,332 per fortnight (single) and $3,568 per fortnight (couple)
• The deeming thresholds have increased from $56,400 to $60,400 (single) and $93,600 to $100,200 (couple)
  • The deeming rates remain unchanged:
    • Assessable assets up to $60,400 (single) and $100,200 (couple) are deemed at 0.25%
    • Assessable assets above these thresholds are deemed at 2.25%

These changes to Age Pension thresholds will be explored in detail in the August edition of our Trade Secrets newsletter.

Sam Eley
Senior Financial Planner
Authorised Representative No. 1234685

If you have any questions or comments, please email me at sam@gfmwealth.com.au

Disclaimer: This document is not an offer or invitation to any person to buy or sell any interest in or deposit funds with any institution.  The information here is of a generic nature, and does not take into account your investment objectives or financial needs.  No person should act upon this information without firstly seeking competent, professional advice specifically relating to their own particular situation.

Copyright: © This publication is copyright. Subject to the conditions prescribed under the Copyright Act, no part of it may, in any form, or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced or transmitted without permission. Enquiries should be addressed to GFM Wealth Advisory.