Thursday, September 19, 2024

ATO boss issues fresh warning for workers after major 2024 change

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ATO Deputy Commissioner Emma Rosenzweig said taxpayers should act now to ensure they are taking advantage of superannuation changes. (Australian Taxation Office/Yahoo Finance)

All Australian workers are now benefiting from a superannuation boost after compulsory employer contributions increased on July 1. The change, worth hundreds of dollars a year to the average worker, has prompted a fresh warning from the Australian Taxation Office (ATO).

ATO Deputy Commissioner Emma Rosenzweig has reminded all Australians to review their superannuation to ensure they are not “missing out on the right entitlements”. She said Australians now have a greater scope to build their nest egg with voluntary contributions.

“Growing your super by making extra payments adds up over time,” Rosenzweig said.

“Super is one of the most important investments many Australians will have. It’s important you remain engaged with your super through all stages of your life, not just when you are ready to retire.”

From July 1, the super guarantee rate rose from 11 to 11.5 per cent.

That means your employer has to put a higher percentage of your pay into your superannuation.

New analysis from the Super Members Council found about 9.2 million Aussies would receive an average of $340 extra added to their super each year, thanks to the change.

Given super payments are calculated as a percentage of your salary, those on higher wages will receive an even bigger boost. For example, those earning between $100,000 and $149,000 will receive an average of $540, while those earning $200,000 and above will pocket an extra $1,039 each year.

The super guarantee rate is due to increase again next year. From July 2025, there will be another 0.5 per cent increase, bringing the rate to 12 per cent.

All Australians are able to add extra money toward their retirement savings fund. From July 1, the government’s limit on how much you can contribute without being subject to higher tax rates rose.

The concessional (before tax) contributions cap jumped from $27,500 to $30,000. The non-concessional (after-tax) contributions cap increased from $110,000 to $120,000.

The bring-forward rule will also change with the limit increase. This rule allows you to make up to three years’ worth of non-concessional contributions in a single financial year and will increase to $360,000.

For employers, the maximum super contribution base increased from $62,270 to $65,070 for the 2024-2025 financial year.

How much you can earn before you’re no longer eligible for the government co-contribution, described as “free money”, has increased.

The scheme gives low-income people who contribute to their super up to $500 per year. The lower income threshold will increase to $45,400, while the higher income threshold will go up to $60,400.

You can use the ATO’s calculator to estimate your entitlement and eligibility, or check out our explainer here.

Rosenzweig noted that many people don’t engage with their superannuation until much later in life.

But now, with an increase to the super rate, and your ability to contribute, there’s no better time to make sure you are making plans to set up your future.

She recommended doing a super health check through the ATO’s website here.

“When it comes to your financial future, every bit counts,” Rosenzweig said.

The super check involves five steps:

If your contact details are wrong, you could be missing out on the money you’re owed.

It’s wise to be across how much you’ve got saved up, and to make sure that your employer is putting in the correct amount. Millions of Australians are owed billions of dollars; don’t let it be you.

Super can be easily lost or forgotten about when you change jobs or addresses. But you can do a check to find out if you’ve got any outstanding money in a matter of minutes through your myGov account.

Having more than one super account could mean you’re paying multiple fees and charges, which may reduce your retirement savings. You can also find out how many accounts you have through myGov and request a transfer.

Plus if the accounts you have aren’t working for you, the ATO said you can find better options at MoneySmart.

Your super fund allocation is not covered by your will so you need to ensure you have a valid death beneficiary nomination.

“This means your loved ones will not be put through unnecessary difficulties to finalise your estate,” the ATO website states.

“Most binding nominations expire every 3 years. Some super funds have an option where nominations do not expire and remain in place until they are revoked.”

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