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Non Concessional Contributions - Aged Under 67


 
 
Non Concessional Contributions

Personal Contributions made into an SMSF from after tax income on which no tax deduction is claimed are known as Non Concessional Contributions. Non Concessional Contributions are personal contributions made into your SMSF from your own personal Bank Account and not from your Employer.

 
 
Eligibility to make Non Concessional Contributions

If you have a Total Superannuation Balance which is equal or more than the general Transfer Balance Cap on 30 June of the previous Financial Year, you are not eligible to make Non Concessional Contributions.

The general Transfer Balance Cap for a given Financial Year is as follows:

Income Year General Transfer Balance Cap
2021-22$1.7 million
2020-21 $1.6 million
2019-20 $1.6 million

If you are under age 67, you do not need to pass a Work Test or meet the Work Test Exemption Criteria to make a Non Concessional Contribution into your SMSF.

 
 
Maximum Non Concessional Contributions Allowed

If you are under age 67, the Non Concessional Contributions limit for a given Financial Year is as follows:

Income Year Amount of cap
2021-22$110,000 per member per annum 
2020-21 $100,000 per member per annum
2019-20 $100,000 per member per annum

 
 
Bring Forward Rule

If you make Non Concessional Contributions above the annual Non Concessional Contributions Cap, you may be able to make Non Concessional Contributions of up to two or three times the annual Non Concessional Contributions Cap in that Financial Year (i.e. $220,000 cap over two years or $330,000 cap over three years). This is known as the bring-forward arrangement. It allows you to make extra Non Concessional Contributions without having to pay extra tax. There is no requirement to elect to use the Bring Forward Rule. It is automatically triggered in the first Financial Year in which a Non Concessional Contribution exceeds the annual limit.

Eligibility for the bring-forward arrangement depends on the following two factors:

  • Your age; and
  • Total Superannuation Balance on 30 June of the previous Financial Year.
  • 1) Age Restriction Extended to 67 from 1 July 2020

    Prior to 30 June 2020, if you were under 65 years of age at any time in a Financial Year, you could access the bring-forward arrangement if all other requirements were met. From 1 July 2020, the cut-off age for accessing the bring forward arrangement is extended to be under 67 years of age at any time in a Financial Year.

    If you are aged 65 or 66 on 1 July of the current Financial Year and you have not previously triggered the bring-forward rule in the preceding two Financial Years, you may access the bring-forward arrangement in the current Financial Year if all other requirements are met. If you are already 67 years old or older on 1 July of the current Financial Year, you cannot access the bring-forward arrangement.

    2) Total Superannuation Balance on Previous 30 June

    The following table sets out the bring forward cap and bring forward period depending on the individual's Total Superannuation Balance on 30 June of the previous Financial Year after 1 July 2021:

    Total Superannuation Balance on 30 June Contribution and Bring Forward Available
    less than $1.48 million3 year ($330,000)
    $1.48 - $1.59 million 2 year ($220,000)
    $1.59 - $1.7 million 1 year ($110,000)
    $1.7 million or more Nil

    Example 1

    Assume you have a Total Superannuation Balance of $200,000 at 30 June 2021 and aged under 67 on 1 July 2021. This enables you to use the Bring Forward Rule over 3 years without exceeding the Contribution Limits. Therefore, you can make Non Concessional Contribution of up to $330,000 during the 2022, 2023 and 2024 Financial Years.

    In this case, the Bring Forward rule expires at the end of the 2024 Financial Year (i.e. 30 June 2024).

    Example 2:

    You are aged under 67 on 1 July 2021 but have a Total Superannuation Balance of $1.55 million at 30 June 2021. This means that you cannot access the full three year bring forward as this would take your balance over $1.7 million (i.e. general Transfer Balance Cap for the 2022 Financial Year). You can only make a Non Concessional Contribution of up to $220,000 during the 2022 Financial Year.

    Example 3:

    Assume you have a Total Superannuation Balance of $1.39 million at 30 June 2021 and are aged under 67 on 1 July 2021 (and therefore eligible for the Bring Forward Rule). You make a Non-Concessional Contribution of $150,000 in the 2022 Financial Year. This means you will have a remaining bring forward cap of $180,000 which can be made in the next two years.

    However, your Total Superannuation Balance on 30 June 2022 has increased to $1.73 million (due to growth in Asset Values). This means you cannot make any further Non Concessional Contributions during the 2023 Financial Year even if you have not fully used up the $180,000 remaining bring forward cap.

     
     
    Bring Forward Rule - Triggered in the 2019/2020 or 2020/2021 Financial Year:

    Once you trigger the bring-forward arrangement in a year, any changes to the Non Concessional Contributions Cap during the bring-forward period does not apply to you. The bring-forward cap amount is set based on the cap in the first year of the period.

    We caution that if you triggered the bring-forward arrangement in the 2019/2020 or 2020/2021 Financial Year by contributing more than $100,000 Non Concessional Contributions, your bring-forward cap will still be $300,000 ($100,000 × 3 years) or $200,000 ($100,000 × 2 years) if all other requirements are met.

    The following table sets out the bring forward caps depending on when the bring forward rule was triggered:

    2019-20 2020-21 2021-22 2022-23 2023-24
    More than $100,000 Cannot exceed $300,000 from 2019-20 to 2021-22 - -
    - More than $100,000 Cannot exceed $300,000 from 2020-21 to 2022-23 -
    - - More than $110,000 Cannot exceed $330,000 from 2021-22 to 2023-24

    Note: Assume you meet the Eligibility Threshold on Total Superannuation Balance each Financial Year to make the Non Concessional Contributions

     
     
    Bring Forward Rule - Triggered in the 2019/2020 or 2020/2021 Financial Year - An Example:

    Barney made the following Non Concessional Contributions into his SMSF:

      2019-2020
    Contribution
    2020-2021
    Contribution
    2021-2022
    Contribution
    2022-2023
    Contribution
    2023-2024
    Contribution
    Age on 1 July Age 63 Age 64 Age 65 Age 66 Age 67
    Example 1 $200,000 $100,000 Nil $330,000 under Bring Forward Rule Nil
    Example 2   $150,000 $100,000 $50,000 $110,000

    Note: Assume Barney meets the Eligibility Threshold on Total Superannuation Balance each Financial Year to make the Non Concessional Contributions.

    Example 1

    In Example 1, Barney triggered the "3 year bring forward rule" in the 2020 Financial Year by contributing $200,000 in December 2019. Therefore, the bring forward cap of $300,000 applies to him (calculated as $100,000 × 3 years) from the 2020 to 2022 Financial Years.

    Barney cannot make further Non Concessional Contributions in the 2022 Financial Year even the annual cap has increased to $110,000 as the change to the Non Concessional Contributions Cap during the bring-forward period does not apply to him and he has used up his bring-forward cap of $300,000.

    The 3 year bring forward rule expires at the end of the 2022 Financial Year and given Barney is under 67 on 1 July 2022, he can contribute up to $330,000 in the 2023 Financial Year.

    Example 2

    In Example 2, Barney triggered the "3 year bring forward rule" in the 2021 Financial Year by contributing $150,000 in September 2020. Therefore, the bring forward cap of $300,000 applies to him (calculated as $100,000 × 3 years) from the 2021 to 2023 Financial Years. The bring forward cap does not change even the annual cap has increased to $110,000 in the 2022 Financial Year.

    Barney makes a further Non Concessional Contribution of $100,000 in the 2022 Financial Year and $50,000 in the 2023 Financial Year. The 3 year bring forward rule expires at the end of the 2023 Financial Year.

    Given Barney is 67 on 1 July 2023, he is no longer eligible for the "3 year bring forward rule" and can only contribute up to $110,000 in the 2024 Financial Year provided Barney passes the work test and subject to the Total Superannuation Balance eligibility threshold.

     
     
    No Tax on Non Concessional Contributions

    All Non Concessional Contributions must be deposited into a Bank Account established for your SMSF. No tax is ever payable on a Non Concessional Contribution made into an SMSF either when the monies are contributed into the SMSF or when monies are accessed later on at retirement.

     
     
    How ESUPERFUND tracks Non Concessional Contributions

    Each Contribution and Contribution Type must be allocated to a specific Member as part of the annual compliance process. This is a legal requirement. Typically the Member making the Contribution and the Contribution Type will be detailed on the Bank Statement. To the extent that the narration on the Bank Statement is insufficient, you will be asked to confirm on whose behalf the contributions have been made and the Contribution Type using an annual checklist we send to all SMSF clients each year by 31 August. You do not need to send us confirmation at the time each Non Concessional Contribution is made. This information is only required annually and we will guide you through the process and prompt you when information is required from you. For more information on Frequently Asked Questions about Non Concessional Contributions, please click here.

     
     
    Excess Non Concessional Contributions

    To the extent you make a Non Concessional Contribution exceeding your Non Concessional Contribution Limit, the ATO will contact you by sending you a Determination letter after the lodgement of your SMSF Annual Return. You will be asked to choose how your Excess Non Concessional Contributions are taxed. You have the following options:

    Option 1 Release the excess amounts from your SMSF

    If you choose this option, you are electing to withdraw all your Excess Non Concessional Contributions and 85% of associated earnings from your SMSF. In this case, the Excess Non Concessional Contributions will NOT be subject to Excess Non Concessional Contributions tax. However the full associated earnings amount stated in the determination is added to your assessable income and taxed at your marginal tax rates subject to a 15% tax offset.

    To select this option, you need to make an election using ATO online services or complete the excess non-concessional contributions election form and send it to the ATO. Generally, you have 60 days after the date of issue of the determination to make an election.

    Once the ATO processed your election, they will send a release authority form to the superfunds you nominated. You will have 20 business days to action a release authority which includes paying the amount stated in the release authority and completing the release authority to send it back to the ATO. Importantly the amount should only be released after the release authority is received.

    Please note that a copy of the completed release authority is required to be provided to our office via the annual checklist for audit purposes.

    Option 2 Pay Excess Non Concessional Contributions tax on the excess amount

    If you choose not to release your Excess Non Concessional Contributions from your SMSF, the Excess Contributions over the Non Concessional Contribution Limit will be subject to Excess Contributions Tax at the highest marginal tax rate of 47%. The excess non-concessional contributions tax will need to be paid from your super.

    Excess Contributions Tax can result in double taxation, with an effective tax rate of up to 94%. It is vital that you keep track of all your Non Concessional Contributions.

    To select this option, you need to make an election using ATO online services or complete the excess non-concessional contributions election form and send it to the ATO. Generally, you have 60 days after the date of issue of the determination to make an election.

    Once the ATO processed your election, they will send a release authority form to the superfunds you nominated. You will have 20 business days to action a release authority which includes paying the amount stated in the release authority and completing the release authority to send it back to the ATO. Importantly the amount should only be released after the release authority is received.

    Please note that a copy of the completed release authority is required to be provided to our office via the annual checklist for audit purposes.


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