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.

SUPER ALERT! On 3 May 2016, the federal government announced an IMMEDIATE cut to the non-concessional contributions cap, including a cessation of the bring-forward rule (the bring-forward rule allowed Australians to bring forward 2 years’ worth of the $180,000 annual non-concessional cap). Subject to legislation and possible exceptions, Australians are now subject to a lifetime non-concessional cap of $500,000, rather than the annual cap of $180,000 (and the bring-forward rule allowing up to $540,000 over a 3-year period for under-65s, no longer applies). Although this change has immediate effect, from 3 May 2016 (7.30pm), it is still subject to legislation. For more information on the change to the non-concessional cap rules, see link at the end of this article.

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 2016/2017 year (and earlier years)

Income yearUnder 5050 years to 59 years*60 years and over*
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. 

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 does the new non-concessional (after-tax) contributions cap work?

On 3 May 2016, the federal government announced an IMMEDIATE cut to the non-concessional contributions cap, including a cessation of the bring-forward rule (the bring-forward rule allowed Australians to bring forward 2 years’ worth of the $180,000 annual non-concessional cap). Subject to legislation and possible exceptions, Australians are now subject to a lifetime non-concessional cap of $500,000, rather than the annual cap of $180,000 (and the bring-forward rule allowing up to $540,000 over a 3-year period for under-65s, no longer applies). Although this change to a lifetime cap of $500,000 has immediate effect, from 3 May 2016 (7.30pm), it is still subject to legislation.

For more detailed information on the proposed change to the non-concessional cap, see the following SuperGuide articles:

How did the old non-concessional contributions cap operate?

Under the old rules in place before 7.30pm on 3 May 2016, assuming an individual was under the age of 65, he or she could make up to $540,000 in non-concessional (after-tax) contributions in one year, representing his or her annual $180,000 cap for three years, subject to some restrictions. If you were aged 65 years or over, the maximum amount of non-concessional contributions that you can make in one year is $180,000. Note that these are the old rules and since 7.30pm on 3 May 2016, they no longer apply (subject to legislation).

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 remained at these levels for the 2015/2016 year, until the Coalition government announced the $500,000 lifetime cap.

Until 3 May 2016 (when the new rules were announced and take effect), the non-concessional cap was $180,000 and up to $540,000 when taking advantage of the ‘bring-forward’ rule. The non-concessional (after-tax) bring-forward rules applied to individuals under the age of 65: Again, if an individual was 65 or over, he or she could 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).

Before 3 May 2016, the rules outlined above meant that an individual could make a total of $210,000 for the 2015/2016 year (or $215,000 if aged 49 years or over on 30 June 2015) 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 could take advantage of the bring forward rules for non-concessional contributions, which meant you could contribute up to $540,000 in one year (for the 2015/2016 year), representing your non-concessional contributions cap over a three-year period (subject to restrictions). Note that these rules no longer apply.

Again, before 3 May 2016 (when the new rules were announced and take effect), an individual could potentially make $570,000 (or $575,000 if aged 49 years or over on 30 June 2015) in super contributions for the 2015/2016 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 2015) for the 2015/2016 year.

Under the new rules, if an individual has not made any non-concessional contributions since 1 July 2007, then he or she can contribute up to $500,000 (indexed) in non-concessional contributions over his or her lifetime

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):

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