Important SMSF Updates to Look Forward to in the 2024 Financial Year

Self-Managed Superannuation Funds (SMSFs) have long been a favored option for Australians seeking greater control and flexibility over their retirement savings. As we approach the dawn of the 2024 financial year, a series of significant updates and changes are poised to transform the landscape of SMSFs. These changes are designed to empower Trustees with the knowledge needed to make informed decisions while navigating the dynamic regulatory environment. In this blog, we’ll delve into the key updates that SMSF Trustees should be eagerly anticipating.

Super Guarantee Rate:

Australia’s Superannuation Guarantee laws currently require employers to contribute 11% of their employees’ ordinary time earnings for the financial year 2023/24. However, recognizing the potential risk of retirees relying heavily on the age pension, the Parliament has taken action. Legislation has been introduced to incrementally raise this contribution percentage to 12% by the year 2025. For small businesses with employees or eligible contractors, timely adjustments to payroll and accounting systems are essential to reflect the updated Super Guarantee (SG) rate of 11% for all salary and wage payments made from 1 July. To ensure accurate super contributions for eligible workers, employers must adhere to the 11% contribution rate for all payments made after the specified date.

Work Test:

Individuals below the age of 75 can presently make or receive after-tax super contributions and salary-sacrificed contributions without needing to fulfill the work test requirements. This holds true as long as they remain within the current annual contribution caps and maintain a balance of less than $1.9 million. However, individuals planning to make an after-tax contribution and subsequently claim a tax deduction (referred to as a ‘personal concessional contribution’) must satisfy the work test by being gainfully employed for a minimum of 40 hours within any 30-day period of the financial year in which the contributions are made.

Super Co-contribution:

The maximum co-contribution entitlement for the 2023/24 year retains its value at $500. Changes have been made to the income thresholds for eligibility. The lower income threshold for full entitlement has been adjusted to $43,445, while the higher income threshold (beyond which eligibility ceases) now stands at $58,445.

Minimum Pension Withdrawal:

A noteworthy alteration commencing on July 1, 2023, is the discontinuation of the 50% reduction in the minimum pension drawdown rate. This change means that when calculating the minimum annual payment on a pension balance for the 2023-24 financial year, the 50% reduction will no longer be a factor.

Conclusion:

As we stand on the brink of the 2024 financial year, the world of SMSFs is poised for transformation. These impending updates and changes hold the potential to empower SMSF Trustees, allowing them to harness the true capabilities of their funds and ensure a brighter, more prosperous retirement future. Embracing these changes, making well-informed decisions, and exhibiting adaptability will be the cornerstones of success for Trustees venturing into this new era of SMSFs. By staying informed and taking proactive steps, Trustees can secure their financial well-being and confidently navigate the evolving landscape of SMSFs.

You can view our SMSF Investment Properties here: https://ausinvestmentproperties.com.au/properties/type/smsf-single-contract