Mark Gleeson, senior technical consultant for MLC, said in a recent webinar that advisers often put all concessional contributions in the same pool.
“However, there are a number of contributions including voluntary contributions by employers, and contributions required for enterprise bargaining agreements,” he said.
“Just focusing on what’s required by the super guarantee law itself for the 2024-25 financial year we had a super guarantee rate of 11.5 per cent that was payable on a maximum quarterly amount of $65,070.
“When we annualise that, you’re looking at a super guarantee of a maximum of $29,932. You have clients that are nowhere near that, so they get 11.5 per cent on their full income, but with high-income earners, they can often get subject to these quarterly caps, and it reduces how much the employer has to pay in super guarantee.”
However, he continued, looking towards the 2025–26 financial year, the SG rate rises to 12 per cent, but the maximum quarterly limit has gone down to $62,500, which has not occurred previously.
“The reason being is if you look at the annual SG amount, it’s equal to the cap of $30,000 in the 2025-26 financial year and with the increase in SG rates, you could end up in a situation where SG takes you above the annual cap,” he said.
“The government brought in legislation that basically stopped that from happening and so we’ve got this anomaly that happens for the first time this year where the SG earnings base gets reduced by $2,570.”
For high-income clients, the SG amount they are getting is reduced because of this effective capping to stop them from exceeding their cap.
“What does that mean? If we annualise 2024-25 it is $29,932, and for the 2025-26 year it is $30,000, an increase of $68, which we haven’t seen before.”
“Typically, what you’ve had is these high-income earners that have had this organic growth through super guarantee and with an increase in the earnings base this year, that organic growth is now gone. So, as an adviser, you’ve got to think about whether you want to compensate for that loss of organic growth for the 2025-26 year?”
Options could include a non-concessional contribution, catch-up concessional contributions or some non-super savings.
“The big question is whether you want to compensate for that lack of organic growth that’s going to occur next financial year, and I think contribution splitting is probably a tool to use going forward.”
