Contributions – what the changed concessional and non-concessional caps may mean for you

Pre-tax contributions will be limited to $25,000 for all taxpayers from 1 July 2017.

Below is a summary of the changes for both concessional and non-concessional contributions.

After- tax contributions

• The $500,000 lifetime limit has been dropped in favour of a $100,000 annual cap. The rules allow the opportunity to bring forward three years of contributions – making it possible to contribute $300,000 in one year.
• For the 2016/17 year, it is still possible to make a contribution of up to $180,000 for one year, or to bring forward three years’ contributions – so you are able to make a contribution of up to $540,000. If you do not use this full limit of $180,000 or $540,000 in the 2016/17 year, then you will be limited to the $100,000 annual and $300,000 bring forward caps for future years.
• Where the bring forward of contributions has been triggered before 1 July 2017, transitional contribution caps may apply.
• If you have a balance of $1.6m or more in your SMSF at 1/7/2017 then you will not be able to make further after-tax contributions.
• When approaching the $1.6m cap care will need to be taken with the bring forward rules as these are restricted by the new $1.6 million balance restriction.

Pre-tax contributions:

• The concessional contributions cap is lowered to $25,000 per year for all taxpayers from 1 July 2017.
• Taxpayers who were aged 49 or over on 30 June 2016 can make up to $35,000 in pre-tax contributions in 2016/17.
• Those aged under 49 on 30 June 2016 can make up to 30,000 in pre-tax contributions in 2016/17.

Some of these changes may require you to adjust your contribution strategies going forward.

This will most likely be the case if you have a superannuation balance of over or close to $1.6 million or were planning on making significant contributions to superannuation in the next few years.