The superannuation contributions caps for concessional (before tax) and non-concessional (after tax) contributions have not increased for the 2016/2017 year. The contributions caps applicable for the 2016/2017 year, are the same limits that were in place for the 2015/2016 year. Continue reading to find out more.
Concessional contributions include your employer’s compulsory Superannuation Guarantee (SG) contributions, your salary-sacrificed contributions, or any contributions claimed as a tax deduction.
Non-concessional (after-tax) contributions are super contributions made from after-tax dollars or non-taxed savings.
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 (NCCs) was now scrapped as a policy. Instead a lower annual NCC cap of $100,000 applies 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. For more information on the 2016/2017 rules, continue reading this article. For more information on the lower cap from July 2017, see SuperGuide article New $100,000 cap: Cut to non-concessional contributions cap.
Which concessional contributions cap applies to you?
Under 50s concessional cap, for the 2016/2017 year: If you’re aged 48 years or younger on the 30 June 2016, you can contribute up to $30,000 in concessional contributions for the 2016/2017 year. Refer table below.
Special over-50s concessional cap, for the 2016/2017 year: If you’re aged 49 years or older on the 30 June 2016, then you can contribute up to $35,000 a year in concessional contributions for the 2016/2017 year.
Note: From 1 July 2017, the general concessional contributions cap will drop to $25,000 for all ages. The higher cap of $35,000, for those who are aged 49 years or older on the last day of the previous financial year (30 June), will not apply from the 2017/2018 year onwards (for more information, 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 year||Under 49|
Aged 48 years or younger on 30 June of previous financial year
|49 years to 59 years*|
Aged 49 years or older on 30 June of previous financial year
|59 years and over**|
|*Concessional contributions cap for older Australians applies in the following way for different financial years:|
**Reduced general concessional cap of $25,000 applies for all ages, from 1 July 2017.
Do you know your non-concessional contributions cap?
Generally speaking, non-concessional contributions are voluntary contributions not claimed as an income tax deduction by you, or your employer.
The non-concessional (after-tax) contributions cap for the 2016/2017 year is $180,000. The non-concessional contributions cap was also $180,000 for the 2015/2016 year, and for the 2014/2015 year.
If you take advantage of the bring-forward rules during the 2016/2017 year, then you can make up to $540,000 in non-concessional contributions in one year, or over 3 years in various combinations. Note that if you have triggered the bring-forward rule in the previous financial year, then you need to take account of the previous year’s non-concessional contribution and the current year’s non-concessional contribution when counting up non-concessional contributions.
Note: If a bring-forward crosses over into the 2017/2018 year, then be mindful of the transitional rules in place. From 1 July 2017, the non-concessional contributions cap drops to $100,000 (see SuperGuide article New $100,000 cap: Cut to non-concessional contributions cap).
Important: The current $180,000 after-tax cap, and the 3-year $540,000 bring-forward cap will remain until 30 June 2017.
Beware bring-forward trap
If you’re under the age of 65, you have the opportunity to bring forward the annual non-concessional cap from future years. If you’re aged 64 years or younger on 1 July of a financial year, then you can take advantage of the bring-forward rules during that entire financial year.
For example, if you’re aged 64 on 1 July 2016, then you can make up to $540,000 in non-concessional contributions during the 2016/2017 financial year, subject to meeting the work test if you make those contributions after turning 65, and subject to meeting the other conditions of the bring-forward rule.
Warning: If you trigger the bring-forward rules in one year, and the contribution caps are indexed the following year, then your limit remains the cap that was in place in the year that you triggered the bring forward rules. You cannot take advantage of the indexation for the following two years, although if a bring-forward crosses over into the 2017/2018 year, then be mindful of the transitional rules in place (see SuperGuide article Non-concessional contributions: 10 facts about new $100,000 cap). For more information on the general bring-forward rules see SuperGuide article Bring-forward rule: 10 super facts you should know.
Example: For the 2013/2014 year, you could make up to $450,000 in one year, representing your cap for that financial year, and the following two years (2014/2015 and 2015/2016 year). If you did this however, your cap for the three years was based on the 2013/2014 cap, that is, $450,000, rather than the non-concessional cap of $540,000 applicable for the 2014/2015 and 2015/2016 years. You could not take advantage of the increase in the non-concessional cap that occurs from the 2014/2015 year, that is, $540,000 (an additional $90,000). If your bring-forward crosses over into the 2017/2018 year, there are transitional rules in place to deal with the drop in the annual NCC cap to $100,000 and the bring-forward cap to $300,000 (refer article link in the previous paragraph).
But some good news… If you aged 63 or 64, you can take advantage of the bring-forward rules without satisfying the over-65 work test rules even though your contributions may represent a period for when you are aged 65 or over. For more information on this special rule for 63 year-olds or 64 year-olds see SuperGuide articles Non-concessional contributions: Tread carefully when age 63 or 64 or 65 and Super contributions: Turning 65 part-way through the year.