Changes to Non-Concessional Contributions

Changes to Non-Concessional Contributions

Changes to Non-Concessional Contributions

As a result of the Federal Government’s superannuation reform, there have been major changes to non-concessional superannuation contributions. Unlike concessional contributions, non-concessional contributions are after tax contributions.  Currently, individuals are able to make Non-concessional contributions of up to $180,000 per year or $540,000 over a 3 year period by accessing the bring forward rules.

As of 1st July 2017, any individual with a superannuation balance of over $1.6 Million will be unable to make any further non-concessional contributions.

For those with a superannuation balance of less than $1.6 Million, the non-concessional contribution limit will be decreased to $100,000 per year or up to $300,000 over a 3 year period (up to a Superannuation balance of $1.6 Million).

Note – Special Transitional Rules Apply

There are rules for those individuals who accessed the bring-forward rules in 2016 and 2017 without fully utilising the limit.  This will be implemented on a staggered approach meaning the non-concessional bring-forward limit will be determined by the trigger year in which the initial non-concessional contribution exceeded the annual limit.

The following tables demonstrate the change in Non-Concessional Bring Forward rule balance limits:

Non-concessional contribution above $180,000 but not fully utilised during 2015-16

3 Year Bring Forward Limit $460,000

Year Annual Limit
2015 – 2016 $180,000 (trigger year)
2016 – 2017 $180,000
2017 – 2018 $100,000

 

Non-concessional contribution  above $180,000 but not fully utilised during 2016-2017

3 Year Bring Forward Limit $380,000

Year Annual Limit
2016 – 2017 $180,000 (trigger year)
2017 – 2018 $100,000
2018 – 2019 $100,000

 

For example:

Joe’s Superannuation balance @ 30/06/2016 was $850,000.  His balance includes a non-concessional Contribution of $200,000 that was made on 10/10/2015.  Joe  was planning on taking advantage of his 3 year bring forward rule balance of $540,000 and contributing a further $340,000 over the next 2 years.  Due to the changes in non-concessional Limits, Joe’s 3 year carry forward balance would be reduced to $460,000.  Joe’s  exceeded the annual non-concessional limit in 2016 ‘trigger year’  his Bring Forward Rule Balance is therefore calculated as $180,000 (2016) + $180,000 (2017) + $100,000 (2018) rather than the original $540,000.  Joe would only be able to contribute a further $260,000 in non-concessional contributions over the next 2 years.

Contributed by Paul Baressi.

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