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Non Concessional Contribution Cap – Bring Forward Rule

One of the most popular questions we received from our clients over the past 6 months relates to the rules and regulations around the 3-year non-concessional contribution cap bring-forward rule.

From 1 July 2014 the after-tax contribution cap increased to $180,000, close to six times the ordinary concessional contribution limit ($30,000 for 49 years and under, and $35,000 for 50 years old and over), which allows members to bring forward a total amount of $540,000 if they are aged 64 or less at any time in the year of making the contribution.

ITAA 97 s292.85(4) says that “your cap for the first year is 3 times the amount mentioned in subsection (2) for the first year“ which means if you exceeded your non concessional contribution cap triggering the bring forward rule prior to 30 June 2014, the caps ARE NOT indexed.

For example: If you made an after-tax contribution of $150,001 on 1 January 2014 you are capped at $450,000 over the 3 years, even if you make the other $299,999 post 30 June 2014.

Please note: As mentioned above, the 3-year non-concessional contribution bring-forward rule can only be triggered for a member aged under 65. This means contributions up to a further 2 years are allowable (ie. they are not restricted from continuing to use the 3-year bring-forward after aged 65) provided they meet the work test.

For any technical questions in relation to the Non Concessional Contribution Cap bring forward rules, or to find out about how our services can support your business, call our team on 03-5226 3599 or email [email protected]