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Total super balance on 30 June of previous year | Maximum total contribution during bring forward period | Bring-forward period |
---|---|---|
Less than $1.66m | $360,000 | 3 years |
$1.66m to less than $1.78m | $240,000 | 2 years |
$1.78m to less than $1.9m | $120,000 | No bring-forward period. General non-concessional cap applies. |
$1.9m or more | Nil | N/A |
In the run-up to retirement, putting some extra money into your super can be a sensible idea. The same goes if you’re lucky enough to receive an inheritance or sell a large asset.
Not only will it give your retirement savings a boost, but when you withdraw super in retirement phase the income is generally tax free.
However, the contribution caps (or limits) can make it tricky to get a large amount of after-tax money into your super account in a single year. One solution is to use a bring-forward arrangement.
Removal of the work test and changes to the upper age limit for making bring-forward contributions from 1 July 2022 mean many older Aussies are now able to take advantage of the valuable opportunity these arrangements provide.
What is a bring-forward arrangement?
Although it sounds complicated, bring-forward contributions are just what they sound like – you are eligible to automatically bring forward your non-concessional contributions caps (or limits) from future years and use them in a shorter time period. This allows you to make extra non-concessional contributions in a single year without paying extra tax.
Bring-forward arrangements are different from carry-forward contributions, which involve using previously unused concessional (before-tax) contributions cap amounts on a rolling five-year basis. Bring-forward arrangements, on the other hand, involve non-concessional contributions.
The bring-forward rules allow you to make up to three years’ worth of non-concessional contributions in a single year – either all at once or as several larger contributions.
From 1 July 2021, the annual general non-concessional (after-tax) contributions cap is $110,000. Your annual personal non-concessional contributions cap may be different, depending on the amount you already have in super (see section on Total Super Balance below).
If you meet all the eligibility criteria, the bring-forward rules allow you to make non-concessional contributions of up to three times the annual general non-concessional contributions cap in a single year (3 x $110,000 = $330,000 in 2023–24).
Background to the 1 July 2022 rule changes
Until 30 June 2022, you needed to be under age 67 during a financial year to start a bring-forward arrangement.
From 1 July 2022, the age limit increased to age 75, allowing people in their early 70s to start a bring-forward arrangement. If you’re under age 75 at any time in a financial year you may now be eligible to make a contribution of up to three times the annual general non-concessional cap in that financial year.
In fact, you actually have a little extra time. If you are turning 75, you have up to 28 days after the end of the month in which you turn 75 to make a personal contribution to your super fund. Even so, it’s wise not to leave it to the last minute as your super fund may not process it immediately.
Another important change from 1 July 2022 onwards was that if you’re younger than 75, you no longer need to meet the work test (or work test exemption) for your super fund to be permitted to accept your non-concessional contributions. So, even if you’re not working you can now use the bring-forward rules.
Who is eligible to use a bring-forward arrangement?
If you want to use the bring-forward rules, you need to check you meet all of the three eligibility criteria before you make your contribution:
Eligibility criteria 1: Age
Rules applying from 1 July 2022 and subsequent financial years
If you are under 75 years of age at any time in a financial year you may be able to make non-concessional contributions of up to three times the annual general non-concessional cap in that financial year. You must be under age 75 for at least one day during the triggering year (the first year) and not already be in an active bring-forward period.
If you are 75 years or older your fund may only be able to accept employer contributions and downsizer contributions. When you turn 75, you have up to 28 days after the end of the month in which you turn 75 to make your contribution.
Eligibility criteria 2: Total Superannuation Balance (TSB)
To make any non-concessional contribution (that is not an excessive contribution), your total superannuation balance (TSB) must be less than $1.9 million on 30 June of the financial year before the one in which you want to make your contribution. From 1 July 2021 to 30 June 2023 the limit was $1.7 million.
From 1 July 2023, if your TSB is $1.68 million or over on 30 June of the previous financial year, you are limited in the available amount of bring-forward contributions you can make
Available bring-forward contribution amounts for 2023–24
Your Total Superannuation Balance | Your available contribution amount and bring-forward period |
---|---|
Less than $1.68m | 3 years of caps ($110,000 x 3 = $330,000) 3 years bring-forward period |
$1.68m to less than $1.79m | 2 years of caps ($110,000 x 2 = $220,000) 2 years bring-forward period |
$1.79m to less than $1.9m | 1 years of caps ($110,000 x 1 = $110,000) No bring-forward, general non-concessional contributions cap applies |
$1.7 million or more | Nil |
Eligibility criteria 3: Triggering a bring-forward arrangement
If you want to commence a bring-forward arrangement in a particular financial year, you must not have already triggered a bring-forward arrangement in a previous year and be in what the ATO terms an ‘active bring-forward period’.
You are automatically considered to be in an active bring-forward period if you contribute more than the annual general non-concessional contributions cap ($110,000 in 2023–24).
It’s possible to accidentally trigger a bring-forward arrangement in a previous financial year without realising it. Before making personal contributions into your super account, consider all the contributions you have made to all your super funds, as excess concessional (before-tax) contributions are also counted towards your non-concessional contributions cap.
How do I start a bring-forward arrangement?
Starting a bring-forward arrangement is easy.
You don’t need to notify your super fund or the ATO, or even fill in an application, as your super fund automatically reports all your contributions to the ATO.
If you are eligible to make non-concessional contributions and you contribute more than the annual general cap ($110,000 in 2023–24), you automatically gain access to your future years of contributions caps. This is referred to as triggering the bring-forward rules.
Background of the bring-forward caps
Over the years, the government has progressively changed the non-concessional contributions cap and bring-forward limits. If you started a bring-forward arrangement in 2014–15, for example, the bring-forward cap was $540,000, which is much higher than the current $330,000 limit.
The table shows the non-concessional caps available in the years prior to the 2021–22 increase in the contribution cap to $110,000:
2014–15 | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | |
---|---|---|---|---|---|---|---|
Annual contribution cap | $180,000 | $180,000 | $180,000 | $100,000 | $100,000 | $100,000 | $100,000 |
Maximum contribution permitted over 3-year period under contributions rules applying at that time | 0 to $540,000 | ||||||
0 to $460,000 | |||||||
0 to $380,000 | |||||||
0 to $300,000 | |||||||
0 to $300,000 |
Source: ATO
kiwi4672@hotmail.com says
Very useful informative article on this overly complicated ATO rule.
Carmen says
Found this article very helpful and examples are good to get a better grasp of the different scenarios.