• Non-concessional contributions

    Non-concessional contributions are called this because the contributor is not entitled to a tax concession for making the contribution. Non-concessional contributions are not subject to the 15% tax payable by the fund on assessable contributions and are most commonly known as after-tax contributions.

    Non-concessional contributions are defined in section 292-90External Link. Unless specifically excluded, they are:

    • contributions made by or for a person that are not included in the assessable income of a super fund (that is, personal contributions that are not allowable as an income tax deduction)
    • the amount of excess concessional contributions (if any) for that financial year
    • additional amounts allocated to a person by the super fund that are not assessable income of the provider
    • spouse contributions, unless the spouse is the person's employer
    • contributions made for a person less than 18 years old that are not made by their employer
    • the amount of any contribution made for the person that is covered by a valid and acknowledged notice under section 290-170External Link, to the extent that it is not allowable as a deduction for the person making the contribution
    • contributions in excess of a person's lifetime CGT cap amount
    • amounts transferred from foreign super funds, excluding amounts included in the fund's assessable income
    • a contribution included in the contributions segment of the member's super interest in a CPF
    • a contribution made on or after 10 May 2006 to a fund while it was non-complying but which has now become complying.

    Section 292-90External Link also specifically excludes the following contributions from being non-concessional contributions:

    • government co-contributions
    • certain contributions arising from structured settlements or orders for personal injuries
    • certain contributions relating to some CGT small business concessions (that do not exceed the CGT cap amount when they are made)
    • contributions made to a CPF (other than a contribution included in the contributions segment of the member's super interest in the fund)
    • contributions not included in the assessable income of a public sector super scheme because of a choice made by the trustee under section 295-180External Link
    • a roll-over super benefit
    • the tax-free component of a directed termination payment
    • amounts not included in a fund's assessable income because of Subdivision 295-D (that is, transfer of tax liabilities to an investment vehicle).

    See also:

    Non-concessional contributions cap

    For 2007-08 and 2008-09 the non-concessional contributions cap was three times the concessional contributions cap, in accordance with subsection 292-85(2)External Link.

    The non-concessional contributions cap was increased to six times the concessional contributions cap for 2009-10 and later years.

    The increase to six-times was due to the government reducing the concessional contributions cap for 2009-10 and later years but wanting to maintain the non-concessional contributions cap at the same level.

    Table 3: Non-concessional contributions caps

    Financial year

    Cap amount

    2013-14

    $150,000

    2012-13

    $150,000

    2011-12

    $150,000

    2010-11

    $150,000

    2009-10

    $150,000

    2008-09

    $150,000

    2007-08

    $150,000

    The non-concessional contributions cap will reflect the indexation of the concessional contributions cap.

    Excess non-concessional contributions are taxed at a rate of 46.5% in accordance with section 5External Link of the Superannuation (Excess Non-Concessional Contributions Tax) Act 2007.

    The tax is imposed on the person who must withdraw an amount from one or more of their super funds so that the total is equal to the tax liability.

    In accordance with subsection 292-20(3)External Link of the IT(TP)A, if a person is over 50 years old as at 30 June and qualifies for the higher concessional contributions cap, they cannot use this higher concessional cap amount to calculate their non-concessional contributions cap. That is, the non-concessional contributions cap is calculated on the concessional contributions cap for people less than 50 years old only.

    Bring-forward

    If a person is younger than 65 at any time in a financial year they can bring forward the next two years of non-concessional contributions, but certain conditions apply. This means they can contribute up to $450,000 over a three year period.

    The bring-forward is automatically triggered when a person's non-concessional contributions exceed $150,000 in an income year.

    Once this happens, the normal non-concessional contributions cap does not apply to the next two years. Instead, the total contributions over the next two years cannot exceed $450,000 minus the contributions made in the year the bring-forward was triggered.

    If a person is 63 or 64 years old at the end of an financial year and they take advantage of the bring-forward, they are not required to meet the work test in either of the following two financial years.

    65 years old or over

    If a person is 65 years old or older on 1 July, they cannot access the bring-forward provision. Their non-concessional contributions cap is $150,000.

    People who are 65 to 74 years old will have a non-concessional contributions cap of $150,000 per year, provided they satisfy the work test set out in the SISR.

    Not allowing people over 65 to bring forward entitlements to non-concessional contributions will ensure people do not inadvertently breach the cap by failing to meet the work test in the following two financial years.

    All non-concessional contributions to all super accounts during a financial year count towards the non-concessional contributions cap.

    Table 4: The operation of the bring-forward

    Year

    Scenario 1

    Scenario 2

    Scenario 3

    Scenario 4

    Year 1

    Less than $150,000

    Bring-forward not triggered in this year.

    Between $150,001 and $449,999

    Bring-forward triggered in this year.

    $450,000

    Entire bring-forward entitlement used in this year.

    More than $450,000

    A tax liability for the excess in this year.

    Year 2

    Up to $150,000 per year or $450,000 over three years.

    Up to the difference between contributions in Year 1 and $450,000 over Years 2 and 3.

    Additional non-concessional contributions before Year 4 will exceed the cap and result in a tax liability.

    Additional non-concessional contributions before Year 4 will exceed the cap and result in a further tax liability

    Year 3

    Year 4

    Up to $150,000 per year or $450,000 over three years.

    Up to $150,000 per year or 450,000 over three years.

    Up to $150,000 per year or $450,000 over three years.

    Example: under 65

    Linda is 64 years old and makes non-concessional contributions of $450,000 to her super funds in the 2010-11 financial year.

    Linda does not have to satisfy the work test in either of the following two financial years (that is, 2011-12 and 2012-13) for the $450,000 contributions made under the bring-forward provisions.

    From 2011-12, being 65 years old, Linda must satisfy the work test to make new, additional contributions. Any additional non-concessional contributions Linda makes before 1 July 2013 will be in excess of her cap and will result in a tax liability.

    If Linda satisfies the work test in the 2012-13 financial year she will have a non-concessional contributions cap of $150,000 for that year. Contributions in excess of $150,000 will exceed her cap and will result in a tax liability.

    Being over 65 years old, she will not be able to bring forward future entitlements to increase her cap (as she did in the 2010-11 income year).

    Example: over 65

    Bernard was 65 years old on 1 July. Therefore, his non-concessional contributions cap amount is $150,000 per year.

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

    • $100,000 in October
    • $100,000 in April.

    As he is not eligible for the bring-forward, Bernard has exceeded his non-concessional contributions cap by $50,000.

    He is liable to pay excess non-concessional contributions tax on that amount.

    Example: bring-forward

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

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

    Sandra can contribute up to $290,000 (that is, $450,000 - $160,000 = $290,000) non-concessional contributions over the next two financial years without paying the excess non-concessional contributions tax.

    Example: impact on indexing

    Alan (60 years old) makes a non-concessional contribution of $450,000 to his super fund in one hit. This triggers the bring-forward.

    During the next two financial years Alan cannot make any more non-concessional contributions to his super without incurring excess non-concessional contributions tax ($450,000 - $450,000 = $0).

    If a bring-forward has been triggered, the two future years' entitlements are not indexed.

    For example, further to the above example, if the non-concessional contributions cap in the third year changed to $180,000, Alan cannot contribute an extra $30,000 without exceeding the cap.

    Example: conditions for bring-forward

    Helen is 64 years old at 1 July 2009 (turns 65 years old in November 2009), and makes a non-concessional contribution of $160,000 to her super fund in the 2009-10 financial year.

    Helen is entitled to use the remaining bring forward cap balance of $290,000 ($450,000 - $160,000 = $290,000) over the next two financial years even though she has turned 65, however she must ensure that the following conditions are met:

    • She meets the work test to be eligible to contribute to her super fund.
    • She makes the $290,000 contribution in at least two separate payments, with each payment not exceeding the fund-capped contributions limit of $150,000 - for more information on fund-capped contribution limits, see Fund-capped contribution limit.
    End of example
      Last modified: 06 Sep 2017QC 34181