The financial world is always in flux. New or altered legislations happen constantly and a big part of our job is keeping abreast of them. Another hugely important part of our job is keeping you abreast of these changes, too.

In that spirit, we’ve put together this blog detailing legislated financial changes that will come into effect this year. Any advice given below is, of course, general in nature. If you’d like to know more details and how these changes relate to you, please come in and see us or reach out. We can have a chat about the opportunities ahead of you and how best to take advantage of them.

8 key financial changes in 2024

Unused CCs – use it or lose it

If you didn’t use up all your concessional contribution (CC) cap amounts from 2018/19, you’ll lose them after June 30, 2024. These unused amounts started piling up from July 1, 2018. For the first time in the 2023/24 financial year, you might have accumulated unused CC cap amounts from up to five previous financial years, thanks to the carry-forward or ‘catch-up’ CC provision.

Here’s how it works: if you’re eligible for catch-up CCs, any contributions you make exceeding the annual CC cap will be deducted from your oldest unused amounts first. But remember, if you had unused CC cap amounts from 2018/19, you won’t be able to use them in 2024/25 as they’ll be outside the five-year window.

To snag those catch-up CCs, you need to:

• Exceed the annual CC cap for the current financial year.
• Maintain a total super balance (TSB) below $500,000 at the end of June before the current financial year.
• Have unused CC cap amounts from one or more of the previous five financial years.

Stage 3 tax cuts

Starting from July 1, 2024, the new amended Stage 3 personal marginal income tax cuts for resident taxpayers kick in. What does this mean for you? Well, if your taxable income falls between $18,200 and $45,000, you’ll enjoy a reduced marginal tax rate (MTR) of 16% (vs current 19%), if your taxable income falls between the increased band of $45,000 and $135,000 (vs current $120,000) your MTR will fall to 30% (vs current 32.5%).

You may want to consider leveraging these savings for extra super contributions, reducing non-deductible debt or personal investments. Additional voluntary CCs could yield more tax savings, maximising benefits. It’s a great opportunity to enhance financial health and plan for the future.

Stage 3 tax cuts impact on voluntary super contributions

Stage 3 Tax cuts are important in the context of voluntary super contributions for the 2023/24 financial year, making these contributions within this income bracket could lead to even greater tax benefits.

If you’re considering making voluntary super contributions this financial year, it’s crucial to take into account several factors. These include your available CC cap (which may include unused amounts from previous years under catch-up provisions if you’re eligible), your current and future eligibility to contribute, contributions tax, and whether Division 293 tax applies to you.

It’s essential to carefully assess your options to maximise the benefits of these changes in tax legislation. If you have any questions or need assistance navigating these complexities, don’t hesitate to reach out.

Work Bonus increased and employment incentive changes

The temporary Work Bonus balance increase from $7,800 to $11,800 is now permanent, instead of reverting back on January 1, 2024. New Age Pension recipients, along with those transitioning from Disability Support Pension or Carers Payment, will enjoy a one-time Work Bonus income bank credit of $4,000. Those who regain eligibility after previously qualifying will also receive an extra income bank credit, with the work bonus remaining at $300 per fortnight.

Additionally, starting July 1, 2024, the ’employment income nil rate period’ doubles from 12 to 24 weeks, now including full-time employment entrants. This applies across various support payments, allowing recipients to retain benefits and have payments reinstated without re-application if their income falls below the threshold. These changes offer increased support and flexibility for individuals in casual, part-time, and full-time employment.

Superannuation Guarantee increase to 11.5%

Starting July 1, 2024, the Superannuation Guarantee (SG) contribution rate climbs to 11.5%, reaching 12% by July 1, 2025. Most employees will benefit from increased SG contributions, but those under ‘total employment cost’ arrangements might see cash salary adjustments.

If you’re a small business owner, consider reviewing systems to meet your obligations to employees. Those of you with existing salary sacrifice plans by July 1, 2024, should adjust amounts to accommodate higher SG rates and potentially increased CC caps.

Deeming rates

Deeming rates are locked until June 30, 2024, at 0.25% (lower) and 2.25% (higher), frozen during low-interest times. If rates increase on July 1, 2024, those of you with financial investments, including pensions, could be affected. This includes pensioners, allowance recipients, concession card holders and aged care residents facing income tests.

Preservation age reaches 60

Starting July 1, 2024, reaching age 60 means hitting preservation age. This change eliminates the low rate cap (currently $235,000) for lump sum super withdrawals between preservation age and 60. Taxation of these withdrawals will now differentiate solely between those under or over age 60. It’s a significant shift, offering clarity and simplifying the taxation process for super withdrawals.

First Home Super Saver Scheme more flexible

Exciting news for First Home Super Saver Scheme (FHSSS) applicants! The Government has introduced amendments, extending the timeframe for requesting a release authority after entering a contract to 90 days (previously 14 days). Also, applicants can now amend or revoke applications before receiving any funds and redirect funds back into their super account under certain conditions without affecting contribution caps.

Moreover, if an application is withdrawn, applicants can reapply in the future. The commencement date is set for September 20, 2024 (12 months from Royal Assent), or an earlier date if announced by the Government. These changes offer more flexibility and ease in accessing FHSSS benefits.

Please reach out

If you feel any of the above applies to you or your family and you’re wondering what, if any, steps you should take, please get in touch. We can help you navigate all things financial, including the world of superannuation, investments, cashflow and debt management and planning for retirement in the most beneficial way possible. The team at Pride Advice is looking forward to hearing from.