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Superannuation contributions: Wearing two caps for 2016/2017 year

Q: Are the caps relating to ‘concessional’ and ‘non-concessional’ contributions regarded as separate? Put simply, can I contribute $30,000 concessional and $540,000 non-concessional sums (a total contribution of $570,000) to my super fund for the 2016/2017 year?

A: The contributions caps are definitely separate because the non-concessional cap relates to after-tax contributions, and the concessional contributions cap relates to before-tax contributions.

Concessional contributions include any employer’s Superannuation Guarantee contributions and salary-sacrificed contributions. Tax-deductible contributions are also treated as concessional contributions. The concessional contributions cap is explained later in this response.

Non-concessional superannuation contributions are more popularly known as after-tax contributions. Such super contributions are subject to a contributions cap, which sets a limit on the amount of non-concessional (after-tax) contributions that you can make over your lifetime (subject to legislation). The current legislated rules impose an annual cap of $180,000 for one year (1 July through to 30 June), but the Coalition government plans to introduce an annual non-concessional contributions cap of $100,000 from 1 July 2017 (subject to legislation).

For more information on the non-concessional contributions rules applicable for the 2016/2017 year, see later in the article, and for information on the proposed changes to the non-concessional contributions cap from 1 July 2017, see SuperGuide article New $100,000 cap: Cut to non-concessional contributions cap.

How does the concessional contributions cap work?

The concessional (before-tax) contributions cap is $30,000 or $35,000 for the 2016/2017 year, depending on your age.

If a person is aged 48 years or under on the 30 June 2016, then the individual is subject to a $30,000 annual concessional cap for the 2016/2017 year.

Australians aged 49 years and over on 30 June 2016 have a special annual concessional contributions cap of $35,000 for the 2016/2017 financial year.

Since July 2014, the concessional cap for under-50s, known as the general concessional cap, has been indexed in $5,000 increments in line with increases in Average Weekly Ordinary Times Earnings (AWOTE). The general concessional cap has increased once in this time, from $25,000 to $35,000.

Until the 2016 Federal Budget, the expectation was that the general concessional cap would have applied to under-50s until it eventually reached $35,000, and then a single concessional contributions cap of $35,000 (indexed) would apply for all ages (see table below), and would continue to be indexed periodically in line with AWOTE.

Subject to legislation, from 1 July 2017, the general concessional cap will be cut to $25,000, and there will be no over-50s cap available. For more information on the proposed change to the concessional contributions cap, see SuperGuide article Concessional contributions caps to be slashed from July 2017.

Concessional contributions cap for 2017/2018 year, 2016/2017 year (and earlier years)

Income yearUnder 5050 years to 59 years*60 years and over*
2017/2018*$25,000$25,000$25,000
2016/2017$30,000$35,000$35,000
2015/2016$30,000$35,000$35,000
2014/2015$30,000$35,000$35,000
2013/2014$25,000$25,000$35,000
2012/2013$25,000$25,000$25,000
* If you are 49 years of age or older as at 30 June 2016 then you are eligible for the higher concessional cap of $35,000 for the 2016/2017 year. If you are 49 years of age or older as at 30 June 2015 then you are eligible for the higher concessional cap of $35,000 for the 2015/2016 year. If you were 49 years of age or older as at 30 June 2014, then your concessional contributions cap for the 2014/2015 year is $35,000. *If you were 59 years of age or older as at 30 June 2013 then you were eligible for the higher concessional cap of $35,000 for the 2013/2014 year. 

**The general concessional cap will be reduced to $25,000 from 1 July 2017 (subject to legislation)

Note: Any contributions in excess of these concessional (before-tax) caps may be subject to extra tax, or will need to be withdrawn from your super account. If the excess concessional contributions are retained in the super account, those excess concessional contributions then count towards an individual’s non-concessional (after-tax) cap. For more information on excess contributions rules, see SuperGuide article Excess contributions rules: A quick summary.

For information on the non-concessional (after-tax) contributions cap, continue reading this article. For more information about the concessional contributions rules, see SuperGuide article Super concessional (before-tax) contributions: 2016/2017 survival guide.

How do the non-concessional contributions caps work?

Note: Since the 2014/2015 financial year, the annual non-concessional cap increased to $180,000 and the bring-forward cap increased to $540,000. The cap remains at these levels for the 2016/2017 year.

SUPER ALERT! On 15 September 2016, Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly Dwyer issued a joint media release announcing that the $500,000 lifetime cap on non-concessional contributions is now scrapped as a policy and will be replaced with an annual cap (subject to legislation), taking effect from 1 July 2017. The current $180,000 after-tax cap, and the 3-year $540,000 bring-forward cap will remain until 30 June 2017, based on information supplied in government documents. For more information on the $100,000 non-concessional cap proposed from 1 July 2017 see SuperGuide article New $100,000 cap: Cut to non-concessional contributions cap.

Assuming an individual is under the age of 65, he or she can make up to $540,000 in non-concessional (after-tax) contributions in one year (for the 2016/2017 year), representing his or her annual $180,000 cap for three years, subject to some restrictions. If you’re aged 65 years or over, the maximum amount of non-concessional contributions that you can make in one year is $180,000 (for the 2016/2017 year).

The non-concessional contributions cap is $180,000 (for the 2016/2017 year) and up to $540,000 when taking advantage of the ‘bring-forward’ rule. The non-concessional (after-tax) bring-forward rules applies to individuals under the age of 65: Again, if an individual is 65 or over, he or she can only make after-tax contributions of up to $180,000 each year rather than $540,000 over a three-year period (which is only available to those under the age of 65).

What is the maximum amount I can make in super contributions for the 2016/2017 year?

The rules outlined above mean that an individual can make a total of $210,000 for the 2016/2017 year (or $215,000 if aged 49 years or over on 30 June 2016) in super contributions in a year and remain within the contributions caps, assuming the mix of concessional and non-concessional contributions remains within each cap. Further, individuals under the age of 65 can take advantage of the bring forward rules for non-concessional contributions, which means you can contribute up to $540,000 in one year (for the 2016/2017 year), representing your non-concessional contributions cap over a three-year period (subject to restrictions).

An individual can then potentially make $570,000 (or $575,000 if aged 49 years or over on 30 June 2016) in super contributions for the 2016/2017 year, subject to the meeting specific contributions caps.

A couple could potentially contribute a combined $1,140,000 (or $1,150,000 if aged 49 years or over on 30 June 2016) for the 2016/2017 year.

For the 2016/2017 year, an individual can potentially make $570,000 (or $575,000 if 49 years or over as at 30 June 2016) in super contributions in one year, subject to the specific caps. A couple could contribute a combined $1,140,000 (or $1,150,000 if 49 years or over) in one year.

I also explain the two contributions caps elsewhere on the site. See the following SuperGuide articles for more information on the caps for the 2016/2017 year (and for earlier financial years):

For more detailed information on the proposed 1 July 2017 changes to the concessional (before-tax) cap, and to the non-concessional (after-tax) cap, see the following SuperGuide articles:

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