Are you clear on what non concessional contributions you can contribute in a year?
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)
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
“Non-concessional contributions can boost your super significantly — but only if you stay within the rules.”
How can we help?
If you need assistance with any aspect of making after tax contributions to superannuation, please feel free to give me a call to arrange a time to meet so that we can discuss your particular requirements in more detail.
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
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
Contribution Limits Are Not the Same for Everyone
Your age and total super balance determine how much you can contribute after tax.
The Bring-Forward Rule Can Accelerate Super Growth
When used correctly, it allows larger contributions earlier, but it limits future contributions for several years.
Exceeding Caps Can Be Costly
Mistakes can lead to excess contributions tax and unnecessary complexity.
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Frequently Asked Questions
What are non-concessional contributions?
Non-concessional contributions are after-tax contributions made to superannuation for which no tax deduction is claimed.
How much can I contribute as a non-concessional contribution each year?
The amount you can contribute depends on the annual non-concessional cap and your total super balance at 30 June of the previous financial year.
What is the bring-forward rule?
The bring-forward rule allows eligible individuals to contribute up to three years’ worth of non-concessional caps in a single financial year.
How does my total super balance affect my contributions?
If your total super balance exceeds certain thresholds, your ability to make non-concessional contributions may be limited or eliminated.
What happens if I exceed my non-concessional contribution cap?
Exceeding the cap can result in additional tax and administrative action, making careful planning essential.
If I make an after-tax contribution, how do I know if it actually counts as non-concessional?
In most cases, if you’re contributing money to super from your personal funds and you’re not claiming a tax deduction, it will generally be treated as a non-concessional (after-tax) contribution.
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