Some changes to super coming – and they’re good ones!

It's fair to say that the rules around Superannuation seem to continually change. It's a challenge for me to keep up, yet alone someone who doesn't do this stuff for a living. However, it's not all bad. In fact, there have been many changes that have been quite positive, and make superannuation easier to build or access.

One such change is happening in the new financial year. For the first time in three years, people will be able to put more money into their super, thanks to some positive stats from the Australian Bureau of Statistics on wage growth. So, starting July 1, you can contribute a bit more to your super than you can right now. The limit for concessional (before-tax) contributions is rising from $27,500 to $30,000, and for non-concessional (after-tax) contributions, it's rising from $110,000 to $120,000.

I probably get more excited about this stuff than you do, but I think it's great news, especially for those with some spare cash they can sacrifice to lower their tax, and the older folks among us who can build their super just a little more before retirement

As a reminder, Concessional contributions, like the super your employer pays or the money you put in before tax, get taxed at only 15%, which is usually way less than your regular tax rate. And non-concessional contributions don't get taxed at all. These can be made from the money you have built up in the bank account. Once the money is in super, regardless of which contribution type, will only be taxed at 15% on any money that is earned, which is often much lower than if you made that same return outside of super.

If you're still with me, there’s also the “bring forward” rule that lets you put in up to three years’ worth of non-concessional contributions in one go (which means from 1 July, you can contribute $360,000 instead of $330,000). Likewise, for concessional contributions, there are "catch-up" contributions that can be made for people with super balances under $500,000, which allows them to contribute their unused pre-tax caps from the last 5 years.

Note that the Concessional contribution cap includes the compulsory super your employer contributes. As of 1 July, this is also increasing to 11.5%, which is generally good news.

If you're thinking of adding extra money to your super, please check with me first! Several rules might impact how, when, and how much you can contribute to your super, such as age, super balance, history, etc. The rules are still complex! But the take-home is that these changes are good, not bad.