Non-concessional (after-tax) cap also cut by Budget

In one of the more sneaky Budget tricks conjured by the Government, the non-concessional contributions cap has been cut by $15,000 for the 2009/2010 year, and the bring forward cap cut by $45,000. (Non-concessional contributions are voluntary contributions not claimed as an income tax deduction by you or your employer.)

If you had the opportunity to read the March edition of our SuperGuide newsletter, we had reported that the non-concessional cap was to increase to $165,000 for the 2009/2010 year, and the bring-forward cap was to increase to $495,000 from $450,000. (If you take advantage of the bring-forward rules, then you can make up to three years of non-concessional contributions in one year, representing your non-concessional cap for the current year and following two years.)

Well, you can throw out those expected increases. The Government has now announced a freeze on the non-concessional cap at 2008/2009 levels which means the cap remains at $150,000 for the 2009/2010 year, and the bring-forward cap remains at $450,000.

The most disappointing aspect of this change is that the Federal Treasurer, Wayne Swan, made no mention of this super swifty in the Budget speech, or Budget papers. The net result is that not only have Australians lost opportunities to contribute at higher rates from the 2009/2010 year, they have also missed out on an increase in the caps that was to occur as a result of indexation. This loss of indexation also applies to the concessional (before-tax) caps. Super savers have been doubly hit by this Government deception.

Note: The non-concessional cap will remain at $150,000 for another year, and going forward will be indexed in line with increases in the concessional cap – six times the level of the (indexed) concessional cap.

*If you’re aged 65 or over, you must satisfy a work test to make super contributions. You cannot make super contributions beyond the age of 74.