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Post Date: 09-01-2024

SMSF Updates for the Financial Year 2024

Self-Managed Superannuation Funds (SMSFs) remain a popular option for Australians looking for more control and flexibility over their retirement funds. As we approach 2024, SMSFs will face a number of substantial adjustments and modifications. These revisions are intended to improve the SMSF landscape, allowing Trustees to make informed decisions while adhering to the developing legal framework.

Rate of Super Guarantee

Employers are required to contribute 11% of their employees' regular time wages during the fiscal year 2023/24 under Australia's Superannuation Guarantee laws. Recognizing that this amount of contribution may still result in retirees relying significantly on the age pension, Parliament has adopted legislation to gradually increase the ratio to 12% by 2025.

Small firms with workers or qualifying contractors must ensure that their payroll and accounting systems are swiftly updated to reflect the new Super Guarantee (SG) rate of 11% for all salary and wage payments received on or after July 1, 2018.

Employers must comply to the 11% contribution rate for all salary and wage payments received after the stipulated date in order to compute super contributions for eligible workers.

Work Test

Individuals under the age of 75 can make or receive after-tax super contributions and salary sacrificed contributions without having to complete the work test requirements, as long as they stay within the present annual contribution restrictions and keep their balance under $1.9 million.

However, if an individual intends to make an after-tax contribution for which they intend to claim a tax deduction (referred to as a 'personal concessional contribution'), they must satisfy the work test requirements by working for 40 hours or more in any 30-day period during the fiscal year in which the contributions are made.

Extraordinary Contribution

The maximum co-contribution entitlement for the fiscal year 2023/24 remains $500. The lower income level (for full entitlement) has been raised to $43,445 and the upper-income threshold (cut-off for eligibility) has been raised to $58,445.

Minimum Pension Withdrawal

The 50% reduction in the minimum pension withdrawal rate will no longer be applicable beginning July 1, 2023. As a result, when computing the minimum annual payment on a pension balance for the fiscal year 2023-24, the 50% reduction will be ignored.

Trustees can continue to harness the promise of SMSFs by embracing these developments and making well-informed decisions, assuring a brighter and more successful future for their retirement assets. As we enter the new SMSF age in 2024, smart planning and agility will be critical to reaping the benefits of these beneficial changes.

Contact Us: Smsf Outsourcing Services