• Non-concessional contributions

    Non-concessional contributions are made into your super fund from after-tax income. These contributions are not taxed in your super fund.

    There are caps on the non-concessional contributions you can make each financial year.

    From 1 July 2017, the government will reduce the annual non-concessional (after tax) contribution cap from $180,000 to $100,000 per year. This will remain available to individuals between 65 and 74 years old if they meet the work test. The cap will be indexed in line with the concessional contributions caps.

    If you exceeded your non-concessional contributions cap in the 2016–17 financial year, you must lodge an income tax return for that year, and you may have to pay extra tax.

    Individuals with a total superannuation balance greater than or equal to the general transfer balance cap ($1.6 million for the 2017–18 financial year) at the end of 30 June of the previous financial year, and makes non-concessional contributions, will have excess non-concessional contributions.

    Table 2: Non-concessional contribution caps

    Financial year

    Non-concessional Cap

    Tax on amounts over cap

    2017–18

    $100,000

    47%

    2016–17

    $180,000

    47% (plus 2% budget repair levy)

    2015–16

    $180,000

    47% (plus 2% budget repair levy

    2014–15

    $180,000

    47% (plus 2% budget repair levy)

    2013–14

    $150,000

    46.5%

    Types of non-concessional contributions include:

    • contributions you make, or your employer makes on your behalf, from your after-tax income
    • contributions your spouse (including a same-sex spouse) makes to your super fund (unless your spouse makes the contributions because they’re your employer)
    • personal contributions not claimed as an income tax deduction
    • excess concessional (before-tax) contributions you have not elected to release from your super fund
    • contributions over your capital gains tax (CGT) cap amount
    • retirement benefits you withdraw from your super fund and 're-contribute' to super
    • most transfers from foreign super funds (including New Zealand KiwiSaver contributions), but excluding amounts included in your fund's assessable income.

    Your age affects your non-concessional contributions cap, how the cap applies, and what options you may have.

    To find out how much you contributed into your super fund to ensure you don’t exceed super contribution caps, contact us on 13 10 20.

    Exclusions

    Some personal contributions may be excluded from counting towards your non-concessional contributions cap for a financial year.

    Exclusions include contributions:

    • made from personal injury payments
    • you chose to count towards your CGT cap that have not gone over your lifetime limit.

    These types of non-concessional 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 Capital gains tax cap election or Contributions for personal injury form before or when you make a contribution.

    Note: if you take money out of super and put it back later, it counts as a new non-concessional contribution.

    When working out your super contributions for the financial year, remember: contributions don't count when the payment is sent, they only count once the payment is received by your fund.

    Make sure your fund receives all your contributions by 30 June.

    Bring-forward provision for individuals 64 years old or younger

    If you are under 65, you may be able to make non-concessional contributions of up to three times the annual non-concessional contributions cap in a single year. If eligible, when you make contributions greater than the annual cap, you automatically gain access to future year caps. This is known as the ‘bring forward’ arrangement.

    From 1 July 2017, the non-concessional contributions cap amount that you can bring forward and whether you have a two or three year bring forward period will depend on your total superannuation balance. Your total superannuation balance is determined at the end of 30 June of the previous financial year in which the contributions that triggered the bring forward, were made.

    For 2017–18 onwards to access the non-concessional bring forward arrangement:

    • the individual must be under 65 years of age for one day during the triggering year (the first year)
    • they must contribute more than the annual cap ($100,000 for the 2017–18 financial year)
    • the difference between the general transfer balance cap ($1.6 million for the 2017–18 financial year) and their total superannuation balance must be greater than the general non-concessional contributions cap ($100,000 for the 2017–18 financial year) at the end of 30 June of the previous financial year. For the 2017–18 financial year this means that they must have a total superannuation balance less than $1.5 million to be able to access the bring forward arrangement.

    For 2017–18 onwards the remaining cap amount for years two or three of a bring forward arrangement is reduced to nil for a financial year if their total superannuation balance is greater than or equal to the general transfer balance cap at the end of 30 June of the previous financial year.

    How the bring forward arrangement works:

    • If the difference between the general transfer balance cap and the individual's total superannuation balance is between one and two times the general non-concessional contributions cap for the first year – the amount is twice the general non-concessional contributions cap over a two year period.
    • If the difference between the general transfer balance cap and the individual's total superannuation balance is greater than two times the general non-concessional contributions cap for the first year – the amount is three times the general non-concessional contributions cap over a three year period.

    For the 2017–18 year the following table represents the bring forward arrangement for the first year.

    2017-18 Bring forward period

    Total superannuation balance on 30 June 2017

    Non-concessional contributions cap for the first year

    Bring forward period

    Less than $ 1.4 million

    $300,000

    3 years

    $1.4 million to less than $1.5 million

    $200,000

    2 years

    $1.5 million to less than $1.6 million

    $100,000

    No bring forward period, general non-concessional contributions cap applies

    $1.6 million

    Nil

    N/A

    Bring-forward provision for people 65 years old or older

    If you are 65 years old or older on 1 July of the financial year you can't access the bring forward provision. Your non-concessional cap is limited to $180,000 each year, and $100,000 from 2017–18 financial year.

    Note: unreleased excess concessional (before-tax) contributions count towards the non-concessional (after-tax) contributions cap and can trigger the
    bring-forward provision.

    Examples:

    Not eligible for the bring-forward provision

    Bernard is 65 years old on 1 July 2018. His non-concessional contributions cap is $100,000 for the 2018–19 financial year and his total superannuation balance on 30 June 2018 is $800,000.

    He made the following non-concessional contributions to his super fund during the financial year, after his birthday:

    • $75,000 in October
    • $75,000 in April.

    Bernard has made $150,000 non-concessional contributions in the financial year. Due to his age, Bernard is not eligible for the bring forward arrangement.

    Bernard exceeded his non-concessional contributions cap by $50,000 ($150,000 − $100,000 = $50,000).

    Excess non-concessional contributions

    Sandra is 53 years old and contributes $160,000 non-concessional contributions to her super fund during the 2013–14 financial year.

    This triggers the bring forward arrangement, as it exceeds the non-concessional contributions cap of $150,000.

    Sandra can contribute up to $290,000 ($450,000 − $160,000 = $290,000) non-concessional contributions over the next two financial years without exceeding the non-concessional contributions cap.

    A single contribution

    Alan is 60 years old and makes a single non-concessional contribution of $540,000 to his super fund in 2014–15. This triggers the bring forward arrangement as it exceeds the non-concessional contribution cap of $180,000.

    During the next two financial years, Alan can't make any more non-concessional contributions to his super funds without exceeding the non-concessional contributions cap ($540,000 − $540,000 = $0).

    Turning 65

    Linda is 64 years old and makes non-concessional contributions of $450,000 to her super fund in 2013–14.

    Even though Linda is 65 years old in 2014–15, she does not have to satisfy the work test in that year (or the 2015–16 financial year) as the contributions were made under the bring forward arrangement.

    If Linda makes any additional non-concessional contributions (assuming she satisfies the work test) before 1 July 2016, she will exceed the cap– resulting in a tax liability.

    If Linda satisfies the work test in 2016–17, she will have a non-concessional contributions cap for the financial year. Being 67 years old in 2016–17, she can't use the bring forward arrangement.

    Effect on the following year

    Austin is 42 years old and makes non-concessional contributions of $180,000 in 2014–15.

    He forgot about $2,000 non-concessional contributions automatically direct debited into his fund from his bank account each year. As a result, Austin has $182,000 total non-concessional contributions for 2014–15. This triggers the bring forward arrangement.

    In 2015–16, Austin contributes a further $540,000. Austin's non-concessional cap for 2015–16 is $358,000 ($540,000 − $182,000). As a result, he made excess contributions of $182,000 in 2015–16 ($358,000 − $540,000).

    Re-contribution strategy

    John is 61 years old and makes a personal non-concessional contribution to his super fund of $200,000 in the 2013–14 financial year. This triggers his bring forward non-concessional cap of $450,000.

    In 2015–16, John is dissatisfied with the return on his super investments and decides to withdraw $300,000 of his super benefits to reinvest in a fixed-term deposit.

    In 2016–17, John decides to re-contribute the term deposit amount to his super fund.

    Because this will be counted as a new contribution, John will exceed his non-concessional cap by $50,000.

    End of example

    Once you trigger the bring forward arrangement in a year, any change to the non-concessional contributions cap for the bring forward period doesn’t apply to you.

    For example, in John's case, although the non-concessional contributions cap in the second and third year of his bring forward changed to $180,000, he couldn’t contribute more than $250,000 without going over his cap.

    There are also limits on what contributions your fund can accept for you.

    Transitional period

    If an individual has made a non-concessional contribution in the 2015–16 or 2016–17 financial years and that triggers the bring forward, but has not fully used their bring forward before 1 July 2017, transitional arrangements will apply so that the amount of bring forward available will reflect the reduced annual contribution caps.

    If the non-concessional contribution bring forward was triggered in 2015–16, the transitional cap will be $460,000 (the annual cap of $180,000 from 2015–16 and 2016–17 and the $100,000 cap in 2017–18). If the bring forward was triggered in 2016–17, the transitional cap will $380,000 (the annual cap of $180,000 in 2016–17 and $100,000 cap in 2017–18 and 2018–19).

    Example:

    John contributes $540,000 in the 2016–17 financial year. At 1 July 2017 his three year bring forward cap is reduced to $380,000. John will not receive an excess non-concessional determination as his contribution was made prior to 1 July 2017. John is now unable to make further non-concessional contributions during the period of the 2017–18 and 2018–19 financial year.

    Example 2

    John contributes $200,000 in the 2016–17 FY. At 1 July 2017 his three year bring forward cap is reduced to $380,000. John is now only able to contribute a total of $180,000 during the period of 2017–18 and/or 2018–19 FY on the condition his total superannuation balance at the end of 30 June 18 & 30 June 19 remains below $1.6 million.

    End of example
    John's contributions cap limits for the period 2014-15 to 2019–20

    2014–15

    2015–16

    2016–17

    2017–18

    2018–19

    2019–20

    $180,000

    $180,000

    $180,000

    $100,000

    $100,000

    $100,000

    0 to $540,000

     


     


     


     


    0 to $460,000

     


     


     


     


    0 to $380,000

     


     


     


     


    0 to $300,000

    Note: To make sure you don't accidentally trigger the bring forward, take into account all contributions made to all your super funds.

    Life insurance premiums and fund fees can count as contributions too. Consider these when planning your contributions.

    If you are unsure if you previously triggered the bring forward provision, or you are considering making a large contribution, phone us on 13 10 20.

    Work test

    If you are 65–74 years old, you need to satisfy a work test in each financial year that a voluntary super contribution is made to your fund.

    The work test requires you to be gainfully employed. To satisfy the work test, you must work at least 40 hours during a consecutive 30-day period each financial year in which the contributions are made.

    Note: unpaid work does not meet the definition of 'gainfully employed'.

    If you meet the work test, your fund can also accept:

    • other types of employer contributions, such as          
      • voluntary contributions your employer may make, such as salary sacrifice contributions
      • other amounts paid by your employer to your super fund, such as administration fees and insurance premiums
       
    • other contributions made to your super fund, such as          
      • personal contributions made by you
      • contributions made by someone other than you, such as your spouse.
       

    You are 70 years old or older

    If you are 70 years old or older, your fund is able to accept compulsory employer contributions made to your super.

    If you are between 70 and 74 years old (inclusive) and meet a work test, your fund can accept certain other contributions.

    The work test requires you to be gainfully employed. To satisfy the work test, you must work for at least 40 hours during a consecutive 30-day period each financial year in which the contributions are made.

    Note: unpaid work does not meet the definition of gainfully employed.

    If you meet the work test and are between 70 and 74 years old (inclusive), your fund can accept:

    • other types of employer contributions, such as          
      • voluntary contributions your employer makes, such as salary sacrifice contributions
      • other amounts paid by your employer to your super fund, such as administration fees and insurance premiums
       
    • personal contributions made only by you.

    If you're 75 years old or older, your fund can only accept compulsory super contributions made for you by your employer.

      Last modified: 06 Sep 2017QC 19749