With the calendar flipping over to financial year 2023-24, there are a number of changes that will affect you financially that you need to understand.

Acting quickly and knowing what the new financial world looks like will ensure you make the most of what is available.

Superannuation

The super guarantee, the payment your employer makes to you, has moved to 11 per cent of salary, up from 10.5 per cent last year.

That will make a significant difference to building a nest egg, so make sure your boss is paying the new amount into your super fund.

You can do that by looking at your pay slip, but be aware that some employers pay super only every three months.

Transfer balance cap

This is the maximum balance you can move into a tax-free pension in your super account on retirement.

The Australian Taxation Office has announced that the cap has risen by $200,000 from $1.7 million to $1.9 million from July 1.

So if you are retiring from July 1, you can make use of that.

If you retire with more than that in your super, then the excess above $1.9 million will have to remain in accumulation mode, where its earnings will be taxed at 15 cents in the dollar.

Contributions caps

Although the transfer balance cap has gone up, contributions caps – the amount you can contribute to super – haven’t changed.

That means you can’t contribute more than $27,500 in concessional, or tax-advantaged, contributions or more that $110,000 in non-concessional contributions.

If you are planning ahead and expect to come into some cash this year, you can contribute any unused concessional contributions caps for as far back as five years.

That could be as much as $132,500 if you have not been paid any super over five years – though you can’t use this method if you have more than $500,000 in your fund.

Non-concessional caps remain at $110,000 annually, or up to $330,000 paying three years ahead.

But if you have hit your transfer balance cap, you can’t make these contributions any more.

Principal at Paramount Financial Solutions Wayne Leggett said now was the time to think about making extra contributions for the financial year.

“You can arrange with your employer to make salary sacrifice contributions through the year or choose to make your own concessional contributions as it suits you,” he said.

Using salary sacrifice means your tax payments are reduced throughout the year to take account of the extra super payments. But you lose the flexibility of having the extra money available through the year when things come up.

Remember, if you do decide to make your own contributions, be strict with yourself to make sure you have the cash on hand to pay in when the time comes.

Pensions

July 1 did not bring an increase in the age pension rate; that won’t happen till September.

But significant changes do apply from July that will be a benefit for pensioners.

The thresholds that determine how much pension you are eligible for have been changed to account for inflation.

That means you can both earn more and have more assets without having your pension reduced or stopped.

Under the latest changes, shown in the table above, you can hold $21,750 more than last year in assets as a single or $32,500 for a couple and still get a full pension. For non-home owners, the increase is $39,250 and $50,000 respectively.

The same figures apply to the upper level assets test beyond which you can no longer qualify for a pension.

For the purposes of the income test, single pensioners can earn $364 or $624 for a couple extra a year before they lose any pension income.

Remember there is a pensioner work bonus that allows pensioners to earn $300 a fortnight extra without it contributing to the income test, as long as the money comes from work.

Deeming rates

Deeming rates are the rates of return the government assumes you earn from your assets when working out your eligibility for the age pension and other benefits.

They were dropped significantly during the COVID-19 crisis to help pensioners when interest rates dropped to almost zero.

The rates are being held at the current low rates until July 2024 and, as market interest rates rise, this is a significant benefit for anyone with a term deposit.

Deeming rates are 0.25 per cent below the limits specified in the table above and 2.25 per cent above those limits.

That means you could be on the pension with a term deposit earning the current average of 4.48 per cent for a year while the government assumes you are earning those lower deeming rates on it.

The New Daily is owned by Industry Super Holdings