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Changes to non-concessional contributions cap (effective 1 July 2017)

The 2016-17 Budget announced several changes in regards to non – concessional contributions. Even though they do not come into effect until 1 July 2017, their effect should be considered pre-30 June 2017.

What are non – concessional contributions?

– personal contributions for which you do not claim an income tax deduction, and

– spouse contributions.

What are the changes?

New non- concessional contributions limit of $100,000 (down from $180,000)

From 1 July 2017, the annual non-concessional contribution cap will be reduced from $180,000 to $100,000 per year. This will remain available to individuals aged between 65 and 74 years old if they meet the work test.

NIL non- concessional contribution cap if your super balance is over $1.6m

From 1 July 2017 your non-concessional cap will be nil for a financial year if you have a total superannuation balance greater than or equal to the general transfer balance cap ($1.6 million in 2017–18) at the end of 30 June of the previous financial year.

Changes to bring-forward rule due to above changes

If you are under 65, the bring- forward arrangement lets you contribute up to 3 times the after tax limit. For 2017–18, 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)

– you must have a total superannuation balance of less than $1.5 million.

As the contributions limit has changed, transitional rules apply:

Moving forward

Depending on your 30 June 2017 super balance, these are your potential non-concessional contribution limits:

What does this mean for you?

Year ended 30 June 2017

You can contribute up to $180,000 after tax. Make sure the contribution is RECEIVED BY YOUR SUPERFUND BY 30 JUNE 2017 for current contribution cap to apply.

Note that your maximum bring-forward amount in 2016–17 has not changed. It is still $540,000 if you have not triggered the bring-forward rules in 2014–15 or 2015–16.

Depending on your age, circumstances and overall financial plan, this may be your last opportunity to maximise your super.

It is also important to consider your excess concessional contributions, if any. These may be counted towards your non-concessional cap if not withdrawn.

Year ended 30 June 2018 (and after)

You need to check your super balance IN ALL YOUR SUPERFUNDS as at 30 June 2017. If over $1.6m, you will not be able to make non-concessional contributions.

Check any requirements for your age and ensure you have not already triggered the bring-forward arrangements in the last two years. This will also affect how much you are allowed to contribute.

The super rules are quite complex and you should check with your advisor before taking an action.

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