Under the current superannuation rules, a member aged under 65 or aged 65 – 74 and who passes the work test can contribute up to $180,000 per annum. The current ‘3 Year Bring Forward rule’ allows members aged under 65 to contribute up to $540,000 over
3 years.
What you can do before 30 June 2017 to maximise your Non-Concessional Contributions depends on your age.
If you are aged under 65 on 1 July 2016, you may maximise your contributions by contributing up to $540,000 during the 2017 Financial Year.
Your eligibility to contribute $540,000 up to 30 June 2017 is subject to the following restrictions:
- You must be aged under 65 at the time the contribution is made. If you are aged over 65, you must pass the work test in the 2017 Financial Year;
- You did not trigger the ‘3-Year Bring Forward Rule’ during the 2015 or 2016 Financial Year.
If you trigger the 3-Year bring forward rule during the 2017 Financial Year (by contributing more than $180,000) but do not use it fully (i.e. you did not contribute $540,000 by 30 June 2017), transitional arrangements will apply to the bring forward
cap. Detailed information on the Transitional rules can be found here.
Effect of timing of contributions:
The timing of the Non-Concessional Contributions for the 2017 Financial Year can therefore make a difference in terms of how much you can ultimately contribute as Non-Concessional Contributions to your SMSF.
An example:
Barney is 61 and wishes to make maximum Non-Concessional Contributions into his SMSF. In addition, Barney did not trigger the 3-year Bring Forward Rule in 2015 or 2016 Financial Years (i.e. his total Non-Concessional Contributions in 2015 were less than $180,000 AND his total Non-Concessional Contributions in 2016 were also less than $180,000).
|
2016-2017 Contribution |
2017-2018 Contribution |
2018-2019 Contribution |
2019-2020 Contribution |
Total Contributions |
Age on 1 July |
61 |
62 |
63 |
64 |
|
Example 1 |
$540,000 |
Nil |
Nil |
$300,000* |
$840,000 |
Example 2 |
$300,000 |
$80,000* |
Nil |
$300,000* |
$680,000 |
Example 3 |
$180,000 |
$300,000* |
Nil |
Nil |
$480,000 |
*Assume that the Total Superannuation Balance is less than $1.4 million at 30 June of the previous Financial Year.
In Example 1, Barney contributes $540,000 under the 3-year Bring Forward Rule in May 2017. This means that Barney cannot contribute again until 1 July 2019 (i.e. the 2020 Financial Year). Assuming Barney’s Total Superannuation Balance at 30 June 2019 is less than $1.4 million and given Barney is under 65 on 1 July 2019, he can use the 3-year Bring Forward Rule in the 2020 Financial year and contribute up to $300,000. Therefore, his total contributions will be $840,000.
In Example 2, Barney triggers the 3-Year Bring Forward Rule during the 2017 Financial Year by contributing $300,000 but does not use it fully (i.e. contributes less than $540,000). Transitional Arrangements will apply and Barney can therefore only make a further $80,000 Non-Concessional Contributions (calculated as $180,000 cap for 2017 Financial Year plus $100,000 cap for 2018 Financial Year and $100,000 cap for 2019). On 1 July 2019, his 3 year Bring Forward cap resets again allowing him to make $300,000 as Non-Concessional Contributions. This brings his total contributions to $680,000.
In Example 3, Barney only contributes $180,000 during the 2017 Financial Year. He does not trigger the Bring Forward Rule. In 2018 Financial Year, given the reduced Non-Concessional Contributions cap limit, his maximum Non-Concessional Contribution under the 3-Year Bring Forward rule is only $300,000 (assuming his Total Superannuation Balance is less than $1.4 million on 30 June 2017). He cannot make further contributions until the 2021 Financial Year. This brings his total contributions to $480,000.
If you are aged between 65 and 74 during the 2017 Financial Year and pass the work test, you may contribute up to $180,000 until 30 June 2017. The "Work Test" requires that you are "Gainfully Employed" for at least 40 hours in a period of not more than 30 consecutive days in the 2017 Financial Year.