$500k lifetime cap to be scrapped
The Turnbull government has reportedly made significant changes to its superannuation reform package, including scrapping controversial plans for a lifetime cap of $500,000 on non-concessional contributions.
This move is in line with extensive speculation that the reform would be on the chopping block, given the reported backlash to the cap from within the Liberal party and the opposition from Liberal party faithfuls.
To date, the proposal had already been significantly modified, with exemptions for personal injury payouts and for those with LRBAs underway before budget night.
Fairfax Media is reporting the cap has been replaced by a mechanism in which people would be able to make both concessional and non-concessional contributions until the cap of $1.6 million in a super retirement account is reached.
Further, there will be a yearly cap of $100,000 on non-concessional contributions until the $1.6 million is reached.
If you have any questions around these new SMSF proposals please feel free to contact;
Cayle Petritsch
SMSF Specialist Advisor
T: 02 9984 7774
E: caylep@nac.com.au
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@nac.com.au
“The Government has scrapped the controversial $500,000 lifetime cap on non-concessional super contributions in favour of more flexible contribution arrangements.”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
The Lifetime $500k Cap Is No Longer Proceeding
The proposed lifetime cap on non-concessional contributions was scrapped following industry and political pressure.
Contribution Options Are More Flexible Now
Rather than a lifetime limit, individuals retain access to annual caps and bring-forward arrangements until they reach the transfer balance cap.
Annual and Bring-Forward Caps Still Apply
Although the lifetime cap was removed, annual non-concessional limits and multi-year bring-forward rules remain central to contribution planning.
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Frequently Asked Questions
What was the $500k lifetime cap proposal?
It was a proposed lifetime limit of $500,000 on after-tax (non-concessional) super contributions that attracted strong opposition and was ultimately abandoned.
Why was the lifetime cap scrapped?
The proposal faced backlash from industry and within the Government, with concerns it was too restrictive and could discourage retirement saving.
What replaced the $500k lifetime cap?
Instead of a lifetime cap, the Government moved to a regime where you can contribute up to the annual non-concessional cap and utilise multi-year ‘bring-forward’ provisions, all while staying under the $1.6 million transfer balance cap.
Does the change affect all super members?
The revisions primarily affect those making larger non-concessional contributions and those planning to use lump-sum contributions to boost super balances.
Should individuals review their contribution strategies?
Yes — with the lifetime cap scrapped and contribution rules evolving, reviewing your approach can help ensure you’re using available limits effectively.
Were any people going to be exempt from the $500k lifetime cap before it was scrapped?
Yes — the proposal had already been modified to include exemptions for personal injury payouts, and also for people with LRBAs underway before budget night.
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