With the Government abandoning its policy to introduce a $500,000 lifetime cap for non-concessional contributions are you clear on what non-concessional contributions you can make to superannuation now?
With the Government abandoning its policy to introduce a $500,000 lifetime cap for non-concessional contributions are you clear on what non-concessional contributions you can make to superannuation now?
Non-concessional contributions are contributions that are made to super from after-tax income or savings.
Instead of going forward with its proposed $500,000 lifetime cap on after-tax contributions, the Government has decided to go back to the current rules for after-tax contributions but with a lower annual limit of $100,000.
This will now allow people to:
- make non-concessional contributions of up to $100,000 per year
- have the ability to bring forward 3 years’ worth of contributions to a single year (allowing you to contribute up to $300,000 in a single year) for those under age 65
The ability to make non-concessional contributions will also be limited to people who have an individual superannuation balance of under $1.6 million. In addition, if you are aged 65 or over you need to pass the “work test” to contribute to your super and cannot bring forward contributions to the current year.
The new rules will apply from 1 July 2017. This means that for the current 2016-17 financial year people can still make non-concessional contributions of up to $180,000.
Some key advice issues:
- The $540,000 bring forward rule will apply for the remainder of 2016-17 income year for those eligible.
- If the bring forward provision is triggered in 2016-17 but the full $540,000 amount is not used, then the bring forward cap available in 2017-18 and 2018-19 will be reduced.
- Post 1 July 2017 taxpayers with over $1.6 million in superannuation will not be able to make NCCs to superannuation.
- Also, taxpayers who are approaching a balance of $1.6 million will have their ability to use the bring forward rule reduced. Where a superannuation balance is between $1.4 million and $1.5 million the bring forward rule will be limited to a maximum of $200,000. In addition, where a superannuation balance is between $1.5 million and $1.6 million the bring forward rule will be limited to a maximum of $100,000.
- A Government fact sheet on the NCC changes is available here.
If you need assistance with any aspect of making after tax contributions to superannuation, please feel free to contact our office on (02) 4601 1000 to arrange a time to meet so that we can discuss your particular requirements in more detail.
