New non-concessional annual contribution cap rules
The new non-concessional annual contribution cap rules broadly sees the current system of non-concessional contributions continuing however with lower caps provided your superannuation account balance is less than $1.6m as follows:
- Up to 30 June 2017: $180,000 (for individuals <65 – eligible for 3 year bring forward rule)
- From 1 July 2017: $100,000 (for individuals <65 – eligible for 3 year bring forward rule)
If your total super balance is above the pension cap of $1.6m as at 30 June then you will not be eligible to make any non-concessional contributions in the following year.
The 3 year bring forward rule on non-concessional contributions can be applied at three times the standard annual cap of $100,000 and allow $300,000 to be contributed subject to eligibility requirements.
There are transitional rules around the 3 year bring forward rule on Non-Concessional Contributions caps and the amount that an individual can contribute under these transitional rules depends on whether the 3 year bring forward rule has been triggered by any non-concessional contributions made in the 2015 year and/or 2016 year and/or 2017 year and the amount of any such contributions made.
Further, the eligibility to make any non-concessional contributions in any year after the 30 June 2017 will depend on the individual’s superannuation balance (all super accounts) as at the 30 June each year. If the balance at the preceding year is $1.6m or greater then no further non-concessional contributions can be made. If your super balance is close to the $1.6m cap amount at 30 June you will only be able to bring forward the $100,000 annual cap for the number of years that would take your balance to the $1.6m amount. For example, if your balance at 30 June 2017 is $1.45m then you would be able to contribute up to $200,000 under the “bring forward” rule from 1 July 2017, assuming you are under age 65.
Going forward, individuals with super balances at or above the applicable pension transfer balance cap will only be able to increase their overall super balance via concessional contributions and investment growth.
As the new rules come into effect on 1 July 2017, the current non-concessional contributions cap of $180,000, and the three-year bring forward cap of $540,000, continue to apply for the 2016/17 financial year. This may provide a planning opportunity for those individuals who want to make larger contributions of up to $540,000 this financial year (30 June 2017) before the lower cap limits commence.