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 2014/2015 year, or for the 2015/2016 year?
A: ‘Yes’ is the answer to the first part of the question. The contributions caps are separate because the non-concessional cap relates to after-tax contributions, and the concessional 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.
How do the concessional contributions cap work?
‘Yes’ can also be the answer to the second part of the question (can I contribute $30,000 concessional and $540,000 non-concessional contributions), assuming you are under the age of 50 at the end of the previous financial year. In plain English, what this means is: the concessional (before-tax) contributions cap for Australians aged 49 years or under is $30,000 for the 2014/2015 year, and is also $30,000 for the 2015/2016 year. More specifically, if a person is aged 48 years or under on the 30 June 2014 (for the 2014/2015 year cap), or 48 years or under on 30 June 2015 (for the 2015/2016 year cap), then an individual is subject to a $30,000 annual concessional cap.
Australians aged 49 years and over on 30 June 2014 have a special annual concessional contributions cap of $35,000 for the 2014/2015 financial year. Likewise, for the 2015/2016 year, Australians aged 49 years or older on 30 June 2015 have a special concessional contributions cap of $35,000.
Since July 2014, the concession cap for under-50s, known as the general concessional cap, is indexed in $5,000 increments in line with increases in Average Weekly Ordinary Times Earnings (AWOTE). The general concessional cap applies to under-50s until it eventually reaches $35,000, and then a single concessional contributions cap will apply for all ages (see table below), and will continue to be indexed periodically in line with AWOTE.
Concessional contributions cap for 2015/2016 year (and earlier years)
|Income year||Under 50||50 years to 59 years*||60 years and over*|
|*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.|
Note: Any contributions in excess of these concessional (before-tax) caps are subject to extra tax or will need to be withdrawn from your super account. The excess concessional contributions then count towards an individual’s non-concessional (after-tax) cap. For more information on excess contributions rules, see SuperGuide article Nightmare on super street: Excess contributions.
How do the non-concessional contributions caps work?
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 2014/2015 year or for the 2015/2016 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 2014/2015 year, or for the 2015/2016 year).
The non-concessional contributions cap is $180,000 (for the 2014/2015 year, and also for the 2015/2016 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).
The rules outlined above mean that an individual can make a total of $210,000 (or $215,000 if 50 years or over) in super contributions in a year and remain within the contributions caps. 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 2014/2015 year, for the 2015/2016 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 50 years or over) in super contributions in one year, subject to the specific contributions caps.
A couple could potentially contribute a combined $1,040,000 (or $1,050,000) if 50 years or over) in one year (for the 2014/2015 year, or for the 2015/2016 year).
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 2015/2016 year. For the 2015/2016 year, an individual can potentially make $570,000 (or $575,000 if 50 years or over) 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 50 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 2014/2015 year (and for the 2015/2016 year):
- Super concessional contributions: 2015/2016 survival guide
- Your 2015/2016 guide to non-concessional (after-tax) contributions
I will update the articles listed above for the 2015/2016 year in July 2015.