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  • Non-concessional contributions and contribution caps

    Non-concessional contributions are:

    • from your after-tax income
    • not taxed in your super fund.

    From 1 July 2021, the non-concessional contributions cap is being increased to $110,000 as a result of indexation in line with average weekly ordinary time earnings (AWOTE). If you contribute more, you may have to pay extra tax

    From 1 July 2017 to 30 June 2021, the non-concessional contributions cap is $100,000.

    Your own cap might be different. It can be:

    If you take money out of your super and put it back later, it counts as a new non-concessional contribution, unless you have claimed and been allowed this amount as a tax deduction.

    If you have more than one fund, the total of all non-concessional contributions made to all your funds during a financial year count towards your non-concessional contributions cap.

    We provide tips to help you avoid exceeding the non-concessional contributions cap.

    If you exceed your non-concessional contributions cap, we will let you know and tell you what your options are to pay the extra tax.

    You must also lodge a tax return for that year if you exceed your cap.

    Find out about:

    Types of non-concessional contributions

    There are many types of non-concessional contributions including:

    Some types of contributions may not be able to be accepted by your super fund, depending on your age and work status (see Acceptance of member contributions and work test).

    Exclusions

    The following types of contributions do not count towards your non-concessional contributions cap:

    These types of contributions are only excluded if you meet all the conditions. You must specifically ask your fund to exclude them, by providing your fund with a relevant form before or when you contribute.

    Government co-contributions are also not counted as non-concessional contributions. You do not have to take any action for these to be excluded.

    Individuals with a defined benefit interest

    If you’re a member of a defined benefit fund, you are usually required to make contributions which impact your defined benefit interest. These will generally count towards your non-concessional contributions cap, even if your employer made the contributions on your behalf.

    If you are uncertain about which contributions are non-concessional, you should contact your fund.

    You may still have to make compulsory non-concessional contributions under an industrial or other workplace agreement, even if your non-concessional contributions cap is nil (because your total super balance is greater than or equal to the general transfer balance cap at 30 June of the previous financial year). In this scenario, these contributions:

    • will be excess non-concessional contributions
    • may not be able to be released, depending on the rules of your fund.

    If your total super balance is less than the general transfer balance cap these compulsory contributions will:

    • not necessarily mean you will exceed your non-concessional cap
    • may limit your ability to make other non-concessional contributions without having to pay extra tax.

    If you have excess contributions that cannot be released from any of your super funds you will be assessed for excess non-concessional contributions tax. You will need to pay this from your own money.

    As defined benefit funds can have different rules, you will need to contact your fund to understand your options.

    You may be able to avoid exceeding your non-concessional contributions cap by:

    • stopping your contributions
    • reducing your contribution rate
    • making contributions under a salary sacrifice arrangement so they become concessional contributions. This will need your employer's approval.

    You will need to carefully consider the impact of reducing these contributions to nil or below certain thresholds as advised by your fund, as this may impact your:

    • defined benefit
    • other benefits offered by your fund, such as insurance.

    You will also need to carefully consider the consequences of making these contributions as salary sacrifice contributions as they may result in you exceeding your concessional contributions cap.

    See also:

    Example: Excess non-concessional contributions and defined benefit funds

    Chris' total super balance at 30 June 2019 is $1.65 million. This reduces his non-concessional contributions cap for 2019–20 to nil.

    However, Chris is a member of a defined benefit fund and it is mandatory for him to make non-concessional contributions to his super fund during 2019–20. As Chris has a nil non-concessional contributions cap, all the mandatory contributions will be excess non-concessional contributions.

    We receive:

    • Chris' individual tax return on 25 September 2020
    • his fund's annual contribution reporting on 30 October 2020.

    We issue Chris with an excess non-concessional contribution determination.

    Chris makes an election to release the excess amount from his only fund. However, Chris' fund does not release the amount because he is a member of a defined benefit fund and his fund does not have to action the release authority.

    We:

    • notify Chris that the excess could not be released
    • issue an excess non-concessional contributions tax assessment.

    Chris now has 21 days to pay this liability from his own sources.

    Example: Excess concessional and excess non-concessional contributions and defined benefit funds

    Andrew is a member of a defined benefit fund. His employer makes contributions on his behalf. These contributions are normally non-concessional contributions however, Andrew has arranged for these contributions to be salary sacrificed as concessional contributions.

    During 2017–18, Andrew's concessional contributions exceed his cap by $5,000. Andrew receives an excess concessional contributions determination but does nothing. He leaves his excess concessional contributions in super.

    Andrew is subject to the top marginal tax rate in 2017–18. Therefore, his excess concessional contributions are taxed at 47% (including the Medicare levy). Andrew receives an offset of 15% for the concessional contributions tax.

    Because Andrew's total super balance at 30 June 2017 was greater than $1.6 million his non-concessional contributions cap for 2017–18 is nil. This means Andrew's excess concessional contributions are also excess non-concessional contributions.

    Andrew can't release the excess non-concessional contributions amount because he is a member of a defined benefit fund. Therefore, Andrew must pay excess non-concessional contributions tax of 47%. This is in addition to the 47% income tax paid on the same contributions when they were excess concessional contributions. This means 94% tax has been paid on these contributions.

    In this case, Andrew's decision to enter into a salary sacrifice arrangement for his compulsory employer contributions resulted in the contributions being taxed at 94%. If Andrew had not made this arrangement, the same contributions would have been taxed as excess non-concessional contributions only at 47%.

    This example shows why it is important to carefully consider how you make extra super contributions.

    End of example

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    Compensation and your Non-Concessional Contribution Cap

    The Super contribution caps fact sheet for individuals below explains the impact on your contribution caps if amounts of compensation are received from financial service providers by your super fund.

    It explains the impact on your concessional and/or non-concessional super contribution caps where an amount of compensation is received by your super fund and allocated to your account.

    It also explains how you may apply to the ATO to request the Commissioner to exercise a discretion in these circumstances where you have or will exceed your concessional or non-concessional contribution caps.

    Your super fund may receive compensation from a financial services provider due to the provision of inappropriate financial advice or where fees were paid but no advice provided. The compensation may include an amount reflecting a refund or reimbursement of adviser fees and/or an amount to compensate for lost earnings. It may also include an interest component.

    Whether the compensation is a contribution and therefore counted towards your contribution caps will depend on the circumstances in which the compensation is received, including:

    • where your super fund engaged the financial service provider and has a right to compensation
    • where you personally engaged the financial services provider and you have a right to compensation
    • where there is no right to compensation.

    If the compensation has been paid to your super fund and allocated to your account and one of the following circumstances applies:

    • the compensation was paid to you and you subsequently contributed it as a personal contribution to your super fund, or
    • you directed the financial service provider to pay the compensation that was payable to you into your super fund,

    the compensation will be a non-concessional contribution in the financial year it is received by the fund.

    However, it will be a concessional contribution to the extent that it is covered by a valid and acknowledged notice of intent to claim a deduction and is allowable as a deduction.

    See also:

    Timing of contributions

    When working out your super contributions for the financial year, remember that contributions only count when the payment is received by your fund, not when the payment is sent.

    Make sure your fund receives all your contributions by 30 June, if that is what you intend.

    It's important to keep track of:

    • the amount of contributions
    • when they are received by your super fund.

    This can help you avoid exceeding the non-concessional contributions cap and paying extra tax.

    Self-managed super fund members

    If you are a member of a self-managed superannuation fund (SMSF) you may be able to make a non-concessional contribution in one financial year and have it count towards your non-concessional contributions cap in the following financial year. You and your SMSF will need to meet several conditions.

    If you want this to happen, you will need to let us know by either:

    • lodging information through Online services for agents or Online services for business (your agent may lodge this for you)
    • writing to us at

    Australian Taxation Office
    GPO Box 9990
    YOUR CAPITAL CITY STATE POSTCODE

    Note: You cannot use the Request to adjust concessional contributions form for non-concessional contributions. However, the form does provide details of the conditions and the information you need to provide to us.

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      Last modified: 30 Sep 2021QC 19749