The short story on super contributions rules (2018/2019 year)

For the 2018/2019 year, a couple has the potential to make 25,000 each in concessional contributions, or $300,000 each in non-concessional contributions, which means a couple can potentially make up to $650,000 in super contributions in a year (for the 2018/2019 year), subject to caps for each individual, and for each type of super contribution.

In other words, an individual can make up to $125,000 in super contributions for the 2018/2019 year, assuming the mix of concessional contributions ($25,000) and non-concessional contributions ($100,000) remains within each cap. If utilising the bring-forward rule, potential contributions in one year for an individual could be $325,000.

• Short story on concessional contributions
• Short story on non-concessional contributions

Short story on concessional (before-tax) contributions: 10 facts

1. What is a concessional contribution? Before-tax contributions, such as compulsory Superannuation Guarantee contributions, salary sacrificed contributions and personal tax-deductible contributions, are known as concessional contributions.
2. How much can you contribute each year? A single concessional contributions cap of $25,000 applies for all age groups. The federal government has now abolished the special over-50s cap that was applicable before July 2017, and since July 2017, the federal government cut the general concessional contributions cap to $25,000. The 2018/2019 year limit (and 2017/2018 year limit) for this type of contribution are set out in the table below.
3. Does the concessional contributions cap ever increase? The annual $25,000 concessional contributions cap is to be indexed periodically, in $2,500 increments, rounded down to the nearest multiple of $2,500. Indexation will be in line with the annual increase in full-time average weekly ordinary time earnings (AWOTE). Since wages growth has been minimal, and wages would need to grow 10% (since July 2017) for the concessional contributions cap to increase to $27,500. Indexation for the contributions is based on the previous calendar year’s movements in AWOTE (so far, June 2017, and December 2017 movements, and June 2018 and December 2018 movements). Based on our calculations, AWOTE has only increased by about 3.4%, that is, 2.36% for the 2017 calendar year, and for the 6 months to June 2018, AWOTE has only increased 1.01% (December 2018 AWOTE was not available at time of writing), which means if this level of wages growth continues, we will have a $25,000 concessional cap for at least 2 more years. For more information on AWOTE indexation, see ATO page Average weekly ordinary time earnings (AWOTE).
4. Are there any special rules to allow extra concessional contributions? You may have the opportunity to make catch-up concessional contributions under new rules which took effect from 1 July 2018. If your Total Superannuation Balance (includes all balances, if you have more than one super account) is less than $500,000 at the end of the previous financial year, then you have the opportunity to start accumulating the unused portions of your concessional caps from previous years (up to 5 years’ worth) in the following financial year, or future years. The rules started from 1 July 2018, but the first opportunity to make the catch-up contributions starts from 1 July 2019 (see SuperGuide article  Concessional contributions: Catch-up rules now apply (10 Q&As)).
5. Work test for over-65s. If you’re aged 65 years or over, then you must satisfy a work test before making super contributions, subject to a one-off exception from July 2019 (see SuperGuide article Over-65s work test: How does it operate?).
6. No personal super contributions beyond age 75. Once you reach the age of 75, you can no longer make personal (voluntary) super contributions. The one, strict exception to this age 75 rule is: if a super fund receives a super contribution on behalf of a fund member, the super contribution must be received (and read that as registered by the fund as received, by allocating the contribution to the fund member’s account) no later than 28 days after the end of the month in which the fund member turns 75. For example, Joseph turns 75 in December 2018. Any super contribution he makes must be allocated to his account by the 28^th day of January (see SuperGuide article Super contributions beyond the age of 75).
7. Superannuation Guarantee contributions have no age limit. Although you cannot make super contributions beyond the age of 75, your employer must continue to make Superannuation Guarantee contributions on your behalf (assuming you satisfy the eligibility rules). For more information on SG rules for older workers, see SuperGuide article Employer super (SG) contributions paid for over-70s.
8. First Home Super Saver Scheme. Since 1 July 2017 (start of 2017/2018 year), eligible Australians are able to make voluntary superannuation contributions (either concessional or non-concessional) of up to $15,000 a year, and a maximum of $30,000 over more than one year, to their superannuation account for the purposes of purchasing a first home. Since 1 July 2018, eligible Australians are able to apply to their super funds to release these contributions (and associated earnings) for the purposes of purchasing a first home (see SuperGuide articles 10-point guide to First Home Super Saver Scheme and First Home Super Saver Scheme a fizzer, again!).
9. Excess concessional contributions may be subject to penalties. Any concessional 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. For more information on excess contributions rules, see SuperGuide article Excess contributions rules: A quick summary.
10. Note: Excess concessional contributions count towards your after-tax contributions cap. If the excess concessional contributions are retained in the super account (rather than withdrawn), those excess concessional contributions then count towards an individual’s non-concessional (after-tax) cap.

Concessional contributions cap for 2018/2019 year (and for 2017/2018 year)

Age	Under 75	75 and over
2018/2019 year	$25,000	SG only
2017/2018 year	$25,000	SG only

For more information on concessional (before-tax) contributions…

For more information on concessional contributions, see the following SuperGuide articles:

• Super concessional (before-tax) contributions: 2018/2019 survival guide
• Concessional contributions cap: A quick guide (10 Q&As)
• Salary sacrifice and super: A guide for employees and employers
• Superannuation and employees: 10 facts about your super entitlements
• Concessional contributions: Catch-up rules now apply (10 Q&As)
• Over-65s work test: How does it operate?
• First Home Super Saver Scheme a fizzer, again!

Short story on non-concessional (after-tax) contributions: 15 facts

1. What is a non-concessional contribution and how is it taxed?If you make a superannuation contribution from after-tax or non-taxed dollars, which is officially called a a non-concessional contribution, you do not receive a tax concession when making this type of super contribution (and no contributions tax is deducted from the contribution by your super fund either). Once the super contribution has been recorded by your super fund, any earnings generated by investing that super contribution are taxed at 15%.
2. How much can you contribute each year?You are subject to an annual non-concessional (after-tax) cap covering each financial year. For the 2018/2019 year, the annual non-concessional contributions (NCC) cap is $100,000, and the bring-forward cap is $300,000. The annual non-concessional contributions cap applies to each person, which means a couple can make non-concessional contributions of up to $200,000 for the 2018/2019 year. Alternatively, by using the bring-forward rules, a couple can make up to $600,000 for the 2018/2019 year in after-tax contributions in one year, representing the NCC cap for a 3-year period (see SuperGuide article New normal: $100,000 non-concessional contributions cap).
3. Does the annual non-concessional contributions cap ever increase? Yes, but only periodically. The indexation of non-concessional (after-tax) contributions cap is linked to the indexation of the concessional (before-tax) cap. The annual $100,000 non-concessional contributions cap will be indexed in $10,000 increments, in line with the indexation of the concessional (before-tax) contributions cap. The annual $25,000 concessional contributions cap is to be indexed periodically, in $2,500 increments, rounded down to the nearest multiple of $2,500. Indexation will be in line with the annual increase in full-time average weekly ordinary time earnings (AWOTE). Refer earlier fact under concessional contributions section of this article.
4. How does the non-concessional contributions cap work? Assuming an individual is under the age of 65, he or she can make up to $300,000 in non-concessional (after-tax) contributions in one year (for the 2018/2019 year), representing his or her annual $100,000 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 $100,000 (for the 2018/2019 year), subject to a one-off exception (see SuperGuide article https://www.superguide.com.au/boost-your-superannuation/over-65s-work-test-how-does-it-operate-again ).
5. Get to know your Total Superannuation Balance. If your Total Superannuation balance is higher than $1.6 million, then you cannot make non-concessional contributions. Since 1 July 2017 (start of 2017/2018 year), an individual can only make NCCs if his or her total superannuation balance is lower than $1.6 million. Sound complicated? It can be, especially if you’re planning to use the bring-forward rules. For more information on the $100,000 non-concessional cap rules, see SuperGuidearticle New normal: $100,000 non-concessional contributions cap.
6. What is the bring-forward rule?The bring-forward rule allows Australians under the age of 65 to bring forward up to 2 years of non-concessional contributions and potentially make up to 3 years’ worth of NCCs in one financial year. The cap for the bring-forward rule is $300,000 (see SuperGuide article Bring-forward rule: A definitive super guide ).
7. What if I triggered the bring-forward rule before July 2017, when a higher NCC cap was in place?For the 2016/2017 year, the annual NCC cap was $180,000, and the 3-year bring-forward cap was $540,000 If you triggered a bring forward in the 2016/2017 year, then a transitional bring-forward cap applies for the 2018/2019 and 2017/2018 years. For more detailed information on the transitional bring-forward cap, see SuperGuide article Understanding the transitional bring-forward rule (for 2018/2019 and 2017/2018 years).
8. Can anyone make non-concessional contributions?Since 1 July 2017, if your Total Superannuation Balance is higher than $1.6 million as at end of previous financial year, then you cannot make non-concessional contributions in the current financial year. If your total superannuation balance is higher than $1.4 million, then your ability to make NCCs is restricted (for more information on this special restriction, see SuperGuide article Total Superannuation Balance: 7 reasons why your TSB matters ).
9. Excess non-concessional contributions may be subject to penalties. Any (after-tax) non-concessional 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. For more information on excess contributions rules, see SuperGuide article Excess contributions rules: A quick summary.
10. Once bring forward is triggered, original bring-forward cap applies. Once you trigger the bring forward, your annual non-concessional contributions cap is based on the first year, regardless of whether the non-concessional cap is to be indexed in later years of the bring forward. Such a rule also applies from 1 July 2017, but there will be an adjustment for a bring forward crossing over into the 2017/2018 year or into the 2018/2019 year (if triggered before July 2017), to allow for the cut in the annual non-concessional cap to $100,000.
11. Co-contribution does not count towards NCC cap.The federal government co-contribution does not count toward your non-concessional (after-tax) contribution cap.
12. Work test for over-65s. If you’re aged 65 years, then you must satisfy a work test before making super contributions, subject to a one-off exception from July 2019 (see SuperGuidearticle Over-65s work test: How does it operate?).
13. No personal super contributions beyond age 75.Once you reach the age of 75, you can no longer make personal (voluntary) super contributions. The one, strict exception to this age 75 rule is: if a super fund receives a super contribution on behalf of a fund member, the super contribution must be received (and read that as registered by the fund as received, by allocating the contribution to the fund member’s account) no later than 28 days after the end of the month in which the fund member turns 75. For example, Joseph turns 75 in December. Any super contribution he makes must be allocated to his account by the 28^th day of January (see SuperGuide article Super contributions beyond the age of 75).
14. First Home Super Saver Scheme.Since 1 July 2017 (start of 2017/2018 year), eligible Australians are able to make voluntary superannuation contributions (either concessional or non-concessional) of up to $15,000 a year, and a maximum of $30,000 over more than one year, to their superannuation account for the purposes of purchasing a first home. Since 1 July 2018, eligible Australians are able to apply to their super funds to release these contributions (and associated earnings) for the purposes of purchasing a first home (see SuperGuide articles 10-point guide to First Home Super Saver Scheme and First Home Super Saver Scheme a fizzer, again!).
15. Downsizing home and contributing to super.Since 1 July 2018, an Australian aged 65 years or over can make non-concessional (after-tax) contributions into a super fund account (accumulation account), up to a maximum of $300,000, from the proceeds of selling his or her home. If a couple sells their home, they can contribute up to $300,000 each. The downsizing contributions will not count towards an individual’s annual non-concessional contributions cap (see SuperGuide articles Contributing super by downsizing your home: 10-point guide and Over 65? Sell your home and contribute more to super).

When and how does the bring-forward rule apply (for 2018/2019 year)?

Total superannuation balance on 30 June 2018	Non-concessional contributions cap for the first year	Bring-forward period
Less than $1.4 million	$300,000	3 years
$1.4 million to less than $1.5 million	$200,000	2 years
$1.5 million to less than $1.6 million	$100,000	No bring-forward period, general NCC cap applies
$1.6 million or more	Nil	n/a

Source: Adapted from Explanatory Memorandum accompanying the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016.

For more information on the non-concessional contributions rules, see the following SuperGuide articles:

• Your 2018/2019 guide to non-concessional (after-tax) contributions
• New normal: $100,000 non-concessional contributions cap
• Non-concessional contributions: 10 facts about the $100,000 cap
• Bring-forward rule: A definitive super guide
• Super contributions: Bring-forward rule and your Total Superannuation Balance
• Understanding the transitional bring-forward rule (for 2018/2019 and 2017/2018 years)
• Gaining from the government: How you can score a co-contribution freebie
• Over-65s work test: How does it operate?)
• 10-point guide to First Home Super Saver Scheme
• Contributing super by downsizing your home: 10-point guide