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Edited version of your written advice
Authorisation Number: 1012703578085
Ruling
Subject: Non-concessional contributions cap.
Question
Will you be able to trigger the 'bring-forward' provision under subsection 292-85(4) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2015.
The scheme commenced on:
1 July 2014.
Relevant facts and circumstances
You are less than 65 years of age.
In the 2009-10 income year (Year 1) you made a non-concessional contribution (NCC) which triggered the bring-forward provision under subsection 292-85(4) of the ITAA 1997.
Your remaining NCC cap for the next two years was $X.
In the 2010-11 income year (Year 2) no NCCs were made so the NCC cap remained at $X.
In the 2011-12 income year (Year 3) you made a NCC of $Y.
As your NCC cap for Year 3 was $X, excess NCCs of $Z arose.
During the 2013-14 income year you were issued a notice of assessment for excess contributions tax.
You have confirmed no contributions were made during the 2012-13 or 2013-14 income years.
You plan on making a NCC before 31 December 2014 and want to confirm the bring-forward provisions will be triggered.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 292-80.
Income Tax Assessment Act 1997 Section 292-85.
Income Tax Assessment Act 1997 Subsection 292-85(2).
Income Tax Assessment Act 1997 Subsection 292-85(3).
Income Tax Assessment Act 1997 Subsection 292-85(4).
Reasons for decision
Summary
As you were less than 65 years of age on 1 July 2014, the bring-forward provision will be available to you if you exceed the annual non-concessional cap of $180,000 during the 2014-15 income year. If your intended contribution enacts the bring-forward, your non-concessional contribution cap for the period 1 July 2014 to 30 June 2017 will be $540,000.
After you turn 65, you will need to satisfy the 'work test' in order to make voluntary contributions to your superannuation fund.
Detailed reasoning
The bring-forward provisions
Where a person is under 65 years of age on 1 July of the relevant income year and they have exceeded their annual non-concessional contribution (NCC) cap in that year, they can trigger the bring-forward provisions under section 292-85 of the ITAA 1997 to access the next two years' NCC cap. This means for a three year period, your maximum cap becomes three times your annual NCC cap. The bring-forward provision is available provided the bring-forward period has not already commenced.
According to the facts, you enacted the bring-forward provision during the 2009-10 income year. Therefore, that bring-forward period ended on 30 June 2012. As no contributions were made during the 2012-13 and 2013-14 income years, the bring-forward provisions were not triggered in those years.
For the 2014-15 year you plan to make a NCC. As you were less than 65 years of age on 1 July 2014, the bring-forward provision will be available to you if you exceed the annual NCC cap of $180,000. This means you can contribute a maximum of $540,000 (three multiplied by $180,000) over the three year period ending 30 June 2017.
If your intended contribution does not exhaust the entire $540,000 cap, please note that even though the balance of the cap will still be available to you until 30 June 2017, you will need to pass the 'work test' for the superannuation fund to be allowed to accept any voluntary contributions you make after turning 65.
To pass the work test you must have been gainfully employed during the income year for at least 40 hours over a 30 consecutive day period. Gainful employment means you are employed or self-employed for gain or reward in any business trade, profession, vocation, calling, occupation or employment.