Super capital gains tax cap election amounts
People who are eligible can exclude some of their personal contributions from counting towards their non-concessional contributions cap. They can do this by electing for the amounts to count instead towards their super capital gains tax (CGT) cap.
To make this election, the amount you contribute must arise from a capital gains event, or a 'CGT look-through earnout right'. It must also meet the requirements of either the:
- small business retirement exemption
- small business 15-year exemption.
You must make the election to your fund before or at the same time as you make the contribution. Elections made after the contribution it refers to are not valid. Your contribution will not be excluded from the non-concessional contributions cap.
Your super CGT cap is a lifetime cap. It is the maximum amount of your eligible personal contributions that you can choose to exclude from counting towards your non-concessional contributions cap. The super CGT cap is indexed every year.
If you elect to use this exclusion for an amount, your super CGT cap is reduced by the amount your fund reports to us at this label.
You must advise your fund that you are claiming the exclusion before or when you make the contribution. Otherwise, your fund must report the amounts as personal contributions.
Your election can be made in the approved Capital gains tax cap election form, although this is not compulsory. However, you must provide your fund with all the information required by this form.
If the exclusion does not apply to you, the amount will be treated as a normal personal contribution. It will count towards your non-concessional contributions cap.
Example: Super CGT cap election
Barry owned a small business for 33 years. When he was 72 years old, he started selling his business assets in preparation for retirement. He is eligible to use the small business 15-year exemption.
In the 2015–16 financial year, Barry contributed to his super fund $550,000 of the capital proceeds he received from selling some of his eligible assets. At the same time, he notified his fund that he was electing to use $550,000 of his super CGT cap, under the small business 15-year exemption. This was to exclude the contribution from counting towards his non-concessional contributions for the year. Therefore, his super CGT cap of $1.395 million was reduced to $845,000.
In 2016–17, the super CGT cap was indexed to $1.415 million. However, Barry has already claimed $550,000 of the cap. Therefore, the super CGT cap available to him in 2016-17 is $1,415,000 – $550,000 = $865,000.
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