The Government has provided further clarity on how the proposed bring forward and the $1.6 million eligibility threshold will work. The government has dumped the controversial superannuation $500,000 lifetime non-concessional contribution cap and replaced it with an annual limited of $100,000. An individual under 65 can continue to ‘bring forward’ three years’ non-concessional contributions.
Bring-forward Non Concessional Contributions (NCC) – transitional arrangements
Where an individual has triggered the bring forward in 2015/16 or 2016/17 but has not used it fully by 30 June 2017, transitional rules will apply.
Where an individual triggers the bring forward in 2016/17, the transitional cap is $380,000 (the current annual cap of $180,000 plus $100,000 annual cap in 2017/18 and 2018/19). See examples 1 and 2 in the table.
If an individual triggers the bring forward in 2015/16, the transitional cap is $460,000 (the current annual cap of $180,000 in 2015/16 and 2016/17 plus $100,000 annual cap in 2017/18). See example 3 in the table.
$1.6 million eligibility threshold
Individuals are unable to make further NCCs where their total superannuation balance is $1.6 million or more (tested at 30 June of previous financial year). Where an individual’s balance is close to $1.6 million, they can only make a contribution or use the bring forward to take their balance to $1.6 million but not beyond.
By: Daniel Spencer