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Superannuation Contributions: Major Legislative Changes & How to Take Advantage

Over the past seven years, Australia’s superannuation landscape has undergone significant legislative reforms aimed at increasing flexibility, contribution limits, and retirement savings strategies. These changes have created opportunities for individuals to maximize their super contributions while staying within regulatory limits.

1. Increased Concessional & Non-Concessional Contribution Caps

Legislation: Superannuation (Objective) Bill 2023, Tax Laws Amendment (Fair and Sustainable Superannuation) Act 2016

From 1 July 2024, the concessional (pre-tax) contribution cap increased from $27,500 to $30,000 per annum.
The non-concessional (after-tax) cap also increased from $110,000 to $120,000 per annum.
Bring-Forward Rule: Individuals under 75 years old can contribute up to $360,000 in one year by triggering the bring-forward provision.

How to Take Advantage:

If you have the financial capacity, maximize concessional contributions to benefit from tax deductions.
Use the bring-forward rule if you receive an inheritance or windfall to accelerate your retirement savings.

2. Carry-Forward Concessional Contributions

Legislation: Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016

Since 1 July 2018, individuals with a total super balance below $500,000 can carry forward unused concessional cap amounts from the past five years.
This means if you haven't fully utilized your concessional cap in previous years, you can make larger tax-deductible contributions in a high-income year to reduce tax liabilities.

How to Take Advantage:

If you had low super contributions in past years due to career breaks or other reasons, now is the time to make catch-up contributions.
High-income earners facing Division 293 tax (additional 15% tax on super contributions for those earning over $250,000) can smooth out contributions across years to optimize tax savings.

3. Work Test Changes for Individuals Aged 67-75

Legislation: Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2021

From 1 July 2022, the work test requirement was removed for individuals aged 67 to 75 making non-concessional contributions.
Previously, individuals in this age group needed to meet a 40-hour work test over 30 days to contribute to super.
The work test still applies for those making concessional (tax-deductible) contributions unless they use the bring-forward rule.

How to Take Advantage:

Retirees who previously couldn’t contribute due to the work test can now make after-tax contributions to boost retirement savings.
This provides an opportunity for those selling assets or receiving an inheritance to transfer wealth into the tax-effective superannuation system.

4. Downsizer Contributions – Expanding Eligibility

Legislation: Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2021

Initially introduced in 2018, this scheme allowed individuals aged 65+ to contribute up to $300,000 per person ($600,000 per couple) into super from the sale of a qualifying home.
From 1 July 2022, the eligibility age was lowered to 60 and from 1 January 2023, further reduced to 55.

How to Take Advantage:

If you’re downsizing, you can move the proceeds into super even if you have exceeded the total super balance limits for other contributions.
Unlike other contribution types, downsizer contributions do not count towards the non-concessional cap.

5. First Home Super Saver Scheme (FHSSS) Enhancements

Legislation: Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2021

Since 1 July 2022, the maximum voluntary super contributions eligible for withdrawal under the FHSSS increased from $30,000 to $50,000.
This scheme allows first-home buyers to save for a deposit within super’s tax-friendly environment.

How to Take Advantage:

Younger investors planning to buy their first home should maximize voluntary contributions to take advantage of lower tax rates within super.
This strategy outperforms traditional savings accounts due to concessional tax treatment.

Final Thoughts: Time to Optimize Your Super Strategy

The past seven years of superannuation reforms have provided greater flexibility and new avenues to build wealth tax-effectively. Whether through higher caps, carry-forward contributions, or downsizer strategies, individuals can significantly enhance their retirement savings while optimizing tax efficiency.

Action Steps:
✔ Review your contribution strategy—maximize new caps where possible.
✔ Utilize carry-forward rules to reduce taxable income in high-earning years.
✔ Consider making non-concessional contributions if retiring soon.
✔ Take advantage of downsizer rules to boost your tax-effective savings.

📩 Need tailored advice? Let’s discuss how these changes can work for you.

Posted in Articles at 24 March 25