Non-concessional
Contributions
https://www.ato.gov.au/Individuals/Super/Super-changes/Change-to-non-concessional-contributions-cap/
One of the changes to the Australian superannuation system
that commenced on 1 July 2017 was the modification of non-concessional
contribution caps.
What are non-concessional contributions?
Non-concessional contributions are generally contributions
made into your SMSF that are not included in the SMSF’s assessable income. The
most common type is personal contributions made by the member for which no
income tax deduction is claimed.
NCCs also include excess concessional contributions for the
financial year. They do not include super co-contributions, structured
settlements and orders for personal injury or capital gains tax (CGT) related
payments that the member has validly elected to exclude from their
non-concessional contributions.
If you have more than one super fund, all non-concessional
contributions made to all of your funds are added together and counted towards
the non-concessional contributions cap.
How has the non-concessional contributions cap changed?
From 1 July 2017, the annual non-concessional contribution cap
reduced from $180.000 to $100,000 per year and this remains available to those
aged between 65 and 74 years old if they meet the ‘work test’. (This test
requires you to be gainfully employed, working at least 40 hours during a
consecutive 30 day period each financial year in which the contributions are
made.)
The non-concessional contributions cap is set at four times
the concessional contributions cap ($25,000 for 2017-18) and will increase in
line with the indexation of this.
Effective 1 July 2017, your non-concessional cap is nil for
a financial year if you have a total superannuation balance greater than or
equal to the general transfer balance cap ($1.6m in 2017-18) at the end of 30
June of the previous financial year. Total superannuation balance is made up of
the balance of all your super and retirement saving accounts. As a result, if you make non-concessional
contributions in that year, they are excess non-concessional contributions.
What is the ‘bring forward’ arrangement?
If under the age of 65, you may make non-concessional
contributions of up to three times the annual non-concessional contributions
cap in a single year by bringing forward your non-concessional contributions
cap for a two or three year period. That is, when you make contributions
greater than the annual cap, you automatically gain access to future year caps.
From 1 July 2017, the non-concessional contributions cap
amount that you are able to bring forward will depend on your total
superannuation balance at the end of 30 June of the previous financial year. To
access the non-concessional bring-forward arrangement, you must be under 65
years of age for one day during the triggering year (the first year) and you
must have a total superannuation balance of less than $1.5m at the end of 30
June 2017.
2017-18 bring forward
period:
Total
superannuation balance on 30 June 2017
|
Non-concessional
contributions cap for the first year
|
Bring forward
period
|
Less than
$1.4 million
|
$300,000
|
3 years
|
$1.4 million
to less than $1.5 million
|
$200,000
|
2 years
|
$1.5 million
to less than $1.6 million
|
$100,000
|
No bring forward
period, general non-concessional cap applies
|
$1.6 million
or more
|
Nil
|
N/A
|