Non-Concessional Contributions Changes
1. Total Superannuation Balance (TSB) Eligibility Threshold Increases to $1.9 million
Your eligibility for Non-concessional Contributions depends on your Total Superannuation Balance (TSB) on 30 June of the previous Financial Year.
Your Total Superannuation Balance is a way to value your superannuation interests in all your Superfunds. You can view your Total Superannuation Balance using the ATO online services through myGov. Log in to ATO online services, select Super, then navigate to Total Superannuation Balance.
From 1 July 2021 to 30 June 2023, if you had a Total Superannuation Balance (TSB) of $1.7 million or more on 30 June of the previous Financial Year, you were not eligible to make Non-concessional Contributions, regardless of everything else.
From 1 July 2023, the TSB Eligibility Threshold increases to $1.9 million. The increase is a result of indexation in line with average weekly ordinary time earnings (AWOTE).
2. Bring Forward Arrangement
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.
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 75 from 1 July 2022
From 1 July 2020 to 30 June 2022, if you were under 67 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 2022, the cut-off age for accessing the bring forward arrangement has been extended to be under 75 years of age at any time in a Financial Year.
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 2023:
|Total Superannuation Balance
On Previous 30 June
Bring Forward Available
|Less than $1.68 million
||3 years ($330,000)
|$1.68 - $1.79 million
||2 years ($220,000)
|$1.79 - $1.9 million
||1 year ($110,000)
|$1.9 million or more
3. No Changes (Non-concessional Contributions)
Apart from the above changes associated with Non-concessional Contributions, there are no other changes in the 2023/2024 Financial Year, namely:
- The annual Non-concessional Contributions Cap for the 2023/2024 Financial Year remains at $110,000 per member.
- The work test requirement no longer applies if you make Personal Non-concessional Contributions after 1 July 2022.
- The age restriction for the bring-forward measure extends from under 67 to under 75 after 1 July 2022.
- Personal Non-concessional Contributions are NOT permitted after attaining age 75 (a special rule applies if you are turning 75).
Concessional Contributions Changes
1. Super Guarantee Rate Increases to 11%
Superannuation Guarantee Contributions (SGC) are contributions made by an Employer for the benefit of an SMSF member.
From 1 July 2022 to 30 June 2023, your Employer was required to contribute a minimum of 10.5% of your before-tax salary income into your super account.
From 1 July 2023 to 30 June 2024, your Employer is required to contribute a minimum of 11% of your before-tax salary income into your super account. In addition, the SGC rate is scheduled to progressively increase to 12% by July 2025. Please click here to check the SGC rate on the ATO website.
Superannuation Guarantee Contributions, along with Salary Sacrifice Contributions and Personal Concessional Contributions count towards the Concessional Contributions Cap. If you intend to make Salary Sacrifice Contributions and/or Personal Concessional Contributions in addition to the Superannuation Guarantee Contributions made by your employer, please ensure you will not exceed the Concessional Contributions Cap given your Superannuation Guarantee Contributions are expected to increase after 1 July 2023.
2. Unused Concessional Cap Amounts from the 2018/2019 Financial Year Will Expire after 30 June 2024
The annual Concessional Contributions Cap for the 2023/2024 Financial Year remains at $27,500 per member. The limit applies to the total of your Employer, Salary Sacrifice and Personal Concessional Contributions.
If your Total Superannuation Balance (TSB) on 30 June of the previous Financial Year is less than $500,000 and you have unused Concessional Cap amounts from the 2018/2019 Financial Year and/or onwards, you may make extra Concessional Contributions – above the General Concessional Contributions Cap.
Importantly unused Concessional Cap amounts are available for a maximum of 5 years and will expire after this. For example, the unused Concessional Cap amount from the 2018/2019 Financial Year will expire if it is not used up by the 2023/2024 Financial Year.
You can view and manage your Concessional Contributions and Carry-forward Concessional Contributions using the ATO online services through myGov. Log in to ATO online services, select Super, then navigate to Carry-forward Concessional Contributions.
3. No Changes (Concessional Contributions)
Apart from the above changes associated with Concessional Contributions, there are no other changes in the 2023/2024 Financial Year, namely:
- The annual Concessional Contributions Cap for the 2023/2024 Financial Year remains at $27,500 per member.
- The work test requirement no longer applies if you make Salary Sacrifice Contributions after 1 July 2022.
- You still need to meet the work test requirement if you make Personal Concessional Contributions between ages 67-74.
- The Total Superannuation Balance (TSB) for accessing the unused Concessional Cap amounts remains at $500,000.
- Personal Concessional Contributions are NOT permitted after attaining age 75 (a special rule applies if you are turning 75).
Other Contributions Changes
1. Spouse Contributions
You can make contributions on behalf of your spouse if your spouse has not reached 75 years of age and met the Total Superannuation Balance (TSB) Eligibility Threshold. An 18% income tax rebate for contributions up to $3,000 per annum applies. That is a maximum rebate of $540 pa.
From 1 July 2023, the Total Superannuation Balance (TSB) Eligibility Threshold that prohibits an individual from claiming the tax offset increases from $1.7 to $1.9 million. Individuals will be able to claim the offset for contributions they make on behalf of their spouse, provided the spouse's TSB is not more than $1.9 million on 30 June 2023, if other criteria are met.
If your income is within the predetermined thresholds and you make a Non-concessional Contribution in a Financial Year, the government will match your contribution with a co-contribution up to certain limits if other criteria are met.
The income thresholds are indexed for the 2023/2024 Financial Year with the lower income threshold increases to $43,445 and the higher income threshold increases to $58,445.
Secondly, the Total Superannuation Balance (TSB) Eligibility Threshold that determines if an individual is entitled to a co-contribution increases from $1.7 to $1.9 million. Individuals with a TSB of less than $1.9 million on 30 June 2023 will be entitled to a co-contribution, if other criteria are met.
1. 50% Reduction in Minimum Pension Drawdown Rate Ceases to Apply
Previously the Government temporarily reduced the superannuation minimum withdrawal limits for Pensions by 50% from the 2019/2020 to 2022/2023 Financial Years. From 1 July 2023, we caution that the 50% reduction in the minimum pension drawdown rate no longer applies.
If you have commenced a Pension Income Stream (i.e. Simple Account Based Pension / Transition to Retirement Income Stream) in your Superfund, you need to ensure you withdraw the minimum pension amounts at the full rate in the 2023/2024 Financial Year (i.e. 01/07/2023 - 30/06/2024) without applying the 50% reduction.
2. General Transfer Balance Cap (TBC) Indexes to $1.9 million
The Transfer Balance Cap (TBC) is a lifetime limit on the total amount of superannuation benefits that can be transferred into the tax-free Retirement Phase account, including most Pensions and Annuities. Superannuation benefits accumulated in excess of the cap can remain in the Accumulation Account, where the earnings are taxed at up to 15%.
The following table sets out the General Transfer Balance Cap (TBC) since its introduction on 1 July 2017:
||General Transfer Balance Cap (TBC)
|From 1 July 2017 to 30 June 2021
|From 1 July 2021 to 30 June 2023
|From 1 July 2023
From 1 July 2023, the general Transfer Balance Cap (TBC) increases to $1.9 million. The increase is a result of indexation in line with average weekly ordinary time earnings (AWOTE). There won't be a single cap that applies to all individuals. Every individual will have their own Personal Transfer Balance Cap of between $1.6 and $1.9 million, depending on their circumstances.
Case One: Commence a Retirement Phase Income Stream for the first time on or after 1 July 2023
If you start a Retirement Phase Income Stream for the first time on or after 1 July 2023, you will have a Personal Transfer Balance Cap of $1.9 million.
The following types of Income Streams are treated as a Retirement Phase Income Stream:
Case Two: Commenced a Retirement Phase Income Stream before 1 July 2023 and TBC previously reached
If you commenced a Retirement Phase Income Stream with any Superfunds and you have previously reached the TBC threshold before 1 July 2023, your Personal Transfer Balance Cap is not entitled to indexation and it remains at $1.6 million (if reached $1.6 million before 1 July 2021) or $1.7 million (if reached $1.7 million between 1 July 2021 and 30 June 2023).
This means if your Pension balance subsequently decreased due to pension withdrawals or investment losses, you will not be able to transfer any more into the Retirement Phase even if the general Transfer Balance Cap has been increased to $1.9 million as you have utilised 100% of your cap space previously.
Case Three: Commenced a Retirement Phase Income Stream before 1 July 2023 and TBC not fully utilised yet
Your Personal Transfer Balance Cap will be between $1.6 million to $1.9 million subject to proportional indexation. The amount of cap space you have available will be determined by the proportionate method based on the highest ever balance of your Transfer Balance Account.
For example, if you transferred $0.85 million into a Retirement Phase account on 1 July 2022, you had utilised 50% of the cap space since the TBC was $1.7 million. Therefore you will be able to transfer an additional 50% of the indexed cap.
- Personal Transfer Balance Cap: $1.8 million ($1.7 million + 0.5 * $200,000).
- Additional balance that can be converted to Retirement Phase: $0.95 million ($1.8 million - $0.85 million).
The ATO will calculate your entitlement to indexation and your Personal Transfer Balance Cap after indexation. You can view your Personal Transfer Balance Cap using the ATO online services through myGov. If you do not yet have a myGov account, you are highly encouraged to create one. Alternatively you may contact the ATO on 13 10 20 directly to obtain this information.
3. Transfer Balance Account Report (TBAR) – Changes to Reporting Frequency
Due to the Transfer Balance Cap measure, the ATO requires SMSF Trustees to report certain transactions using the Transfer Balance Account Report (TBAR) so as to record and track the movements in the member’s Transfer Balance Account and apply provisions should the member breach the Transfer Balance Cap (TBC). For further information on TBAR, please click here.
Prior to 1 July 2023, your Total Superannuation Balance affects the reporting frequency for certain TBAR reportable events. Some Superfunds are allowed to report TBAR no later than the due date for lodging the SMSF’s annual return.
From 1 July 2023, all SMSFs are required to report most events that affect the member's Transfer Balance within 28 days after the end of the quarter in which the event occurs. A transition period applies for the unreported events that occurred before 30 September 2023, you have until 28 October 2023 to report them.
ESUPERFUND is currently upgrading the TBAR events collection and lodgement functions. One of the major updates involves mapping the reportable transactions that have been coded by you in the Interim Checklist to the TBAR page, alleviating you from the burden of providing the same information multiple times.
As soon as we have completed the functional improvements, Trustees will be notified with an inbox message detailing how ESUPERFUND collects information to comply with the new quarterly TBAR reporting requirements.
If you have any urgent events that are required to be reported to the ATO sooner (e.g. respond to an Excess Transfer Balance Determination or respond to a Commutation Authority), please contact our office via the Client Portal Inbox.
4. Low Rate Cap Increases to $235,000
When you are between your preservation age and 60 years old, the tax on Lump Sum withdrawals made (provided you are eligible) is affected by the low rate cap amount. The taxable component of the amount withdrawn which is below the low rate cap amount is tax free. The low rate cap amount for the 2023/2024 Financial Year increases to $235,000 (it was $230,000 for the 2022/2023 Financial Year).
For more information on low rate cap and how it affects the tax payable on Lump Sum withdrawals, please click here.
1. Rollovers and Release Authorities Must Comply with SuperStream Rules
SuperStream is a data and payment standard used for digital transactions within the super industry.
From 1 October 2021, all superannuation funds, including SMSFs must comply with the SuperStream rules when they rollover cash to the SMSF or from the SMSF. In addition, all superannuation funds, including SMSFs must comply with the SuperStream rules when a member elects to release funds from the SMSF for certain types of release authorities.
For more information on how SuperStream affects the Rollover and Release Authority processes, please click here.
2. COVID-19 Rental Relief / Loan Payment Relief Ceases to Apply after 30 June 2022
If your SMSF owns a rental property or has a limited recourse borrowing arrangements, temporary rental relief or loan payment relief may be applicable for your SMSF. While this would normally trigger a range of SIS Act compliance breaches, the ATO indicated that it would not be taking compliance action for the 2019/2020, 2020/2021 and 2021/2022 Financial Years if certain requirements are met. For more information on the requirements for rental relief or loan payment relief, please click here.
We caution these COVID-19 reliefs no longer apply after 30 June 2022. It is important to review your superfund’s rental/loan agreements and ensure these reliefs are no longer offered.
3. The work test requirement no longer applies to Non-mandatory Contributions after 1 July 2022
Prior to 1 July 2022, individuals aged 67-74 must meet a work test or be eligible for the work test exemption (WTE) in order to make non-mandatory contributions (e.g. Salary Sacrifice Contributions and Personal Non-concessional Contributions). In addition, the Superfund must apply the work test at the time they accept the Contribution from their members by collecting a Work Test Declaration.
From 1 July 2022, the work test requirement was removed except for individuals wishing to make a Personal Concessional Contribution. However Superfunds no longer have to apply the work test at the time they accept the Personal Concessional Contribution from their members. The ATO will be administering the work test at the time the member lodges the personal income tax return. Due to this change, ESUPERFUND no longer requires your Work Test Declaration if you make a Personal Concessional Contribution after 1 July 2022.