Changes to marginal tax rates and superannuation contributions

Stage 3 tax cuts

The recently enacted stage 3 tax cuts, set to take effect on 1 July 2024, have repealed and replaced the originally legislated stage 3 tax cuts.

The following amendments will take effect under the newly amended stage 3 tax cuts:

• Reduce the 19 per cent tax rate to 16 per cent (for incomes between $18,200 and $45,000).
• Reduce the 32.5 per cent tax rate to 30 per cent (for incomes between $45,000 and the new $135,000 threshold).
• Increase the threshold at which the 37 per cent tax rate applies from $120,000 to $135,000.
• Increase the threshold at which the 45 per cent tax rate applies from $180,000 to $190,000.

Under the revised stage 3 tax cuts a person earning $40,000 will receive a tax cut of $654, a person earning $100,000 will receive a tax cut of $2,179, and a person earning $200,000 will receive a tax cut of $4,529.

New tax table, from July 1st 2024, with proposed and revised (on 25 January 2024) Stage 3 tax cuts

As a result of the newly legislated stage 3 tax cuts, previous tax planning strategies may need to be re-considered.

Superannuation contributions

From 1 July 2024, changes to the concessional and non-concessional contributions as well as the Superannuation Guarantee will be in effect.

Concession contribution

The concessional contribution cap is being lifted from $27,500 to $30,000 from 1 July this year. Concessional contributions are pre-tax contributions which include employer compulsory contributions as well as voluntary contributions where a personal tax deduction is claimed.

There has been no change to the ability to apply the catch-up concessional contributions for unused concessional caps from the previous 5 income years, where your total superannuation balance (TSB) is less than $500,000. The 2019 income year will be off the table after 30 June 2024 income year so don’t delay if you have unused caps from 2019.

Non-concessional contributions

The non-concessional contribution cap is being lifted from $110,000 to $120,000 from 1 July this year. Non-concessional contributions are post-tax contributions which can be made where a member’s TSB is below the TSB cap of $1.9m on 30 June 2024.

The bring-forward rule (which allows you to bring forward future non-concession contributions) is still applicable .The higher non-concessional contributions cap means that if you did not trigger the bring-forward rule in the year ended 30 June 2023, and do not trigger it this financial year, and your TSB is less than $1.66 million at 30 June 2024, then you can contribute up to $360,000 from July 1 2024.

Superannuation guarantee

The Superannuation guarantee (SG) which is the amount of super that each employer must contribute to an employee’s super fund on top of their wage is increasing from 11% to 11.5% from 1 July this year.

If you would like to discuss how any of the above changes may impact you, please feel free to contact us today.