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

January 22, 2019 by Trish Power 10 Comments

Contents

  • Short story on concessional (before-tax) contributions: 10 facts
  • Concessional contributions cap for 2018/2019 year (and for 2017/2018 year)
  • For more information on concessional (before-tax) contributions…
  • Short story on non-concessional (after-tax) contributions: 15 facts
  • When and how does the bring-forward rule apply (for 2018/2019 year)?

You can make two types of superannuation contributions – concessional (before-tax) contributions and non-concessional (after-tax) contributions – and each type of contribution has a separate limit known as a contributions cap (see text and tables below).

A concessional contribution is a before-tax contribution made by your employer (typically in the form of Superannuation Guarantee, or indirectly, as salary sacrifice contributions), or made by you, as tax-deductible super contributions. Each year, eligible individuals can make concessional contributions up to a limit, before penalties apply.

A non-concessional contribution is an after-tax contribution that has already had income tax paid on it, or is from non-taxed income. Each year, eligible individuals can make non-concessional contributions up to a limit, before penalties apply.

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 28th 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 28th 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

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IMPORTANT: SuperGuide does not provide financial advice. All information on SuperGuide.com.au is intended only as a guide. It is important to seek professional accredited financial advice when considering whether the information is suitable to your personal circumstances. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

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      • Super concessional (before-tax) contributions: 2018/2019 survival guide
      • Your 2018/2019 guide to non-concessional (after-tax) contributions
      • Cashing in on the co-contribution rules (2018/2019 year)
    • Super contributions caps
      • Super contributions caps for the 2018/2019 year
      • Concessional (before-tax) contributions cap
      • Catch-up concessional contributions
      • Non-concessional (after-tax) contributions cap
      • Bring-forward rule
      • Total superannuation balance and super contributions
    • Superannuation Guarantee (SG)
      • Latest SG rate
      • SG for employees
      • SG for employers
      • Non-payment of SG
      • Salary sacrifice and SG
      • Tax-deductible super contributions and SG
    • Salary sacrifice and super
    • Tax-deductible super contributions
    • Spouse contributions
    • Total superannuation balance
    • Contributions tax
    • Excess contributions
  • Super fund performance
    • Super fund performance: A Super Guide
    • Superannuation investment for beginners
      • Super investment: How it works
      • Default investment option
      • Benchmarking your super fund
      • Risk profile
      • Choosing an investment option
      • Switching investment options
      • Responsible investing
      • Retirement investment options
    • Superannuation investment: How does it all work?
      • Superannuation investment strategies
      • Investment choice (Choosing an investment option)
      • Responsible investing
      • SMSF investment
      • Types of super investments
      • Listed or unlisted investments
      • Franked dividends
      • Platforms/wraps
      • Investing in retirement
      • Super and borrowing
    • Latest performance (Superannuation investment returns)
      • Latest monthly results
      • Latest financial year results
      • Latest calendar year results
      • Investment Performance Reckoners
    • Best performing super funds
      • Top 10 super funds
      • Top 30 super funds
      • Top 30 pension funds
      • Investment Performance Reckoners
    • Investment Performance Reckoners
      • Superannuation Investment Performance Reckoner (5 investment options)
      • Asset Class Performance Reckoner (13 asset classes)
      • Monthly Superannuation Returns Performance Reckoner
    • Choosing an investment option
      • Default investment option
      • Your risk profile
      • Benchmarking your super fund
      • Buy/sell spread costs
      • Hedged vs unhedged international shares
      • Responsible investing
      • Switching investment options
      • Retirement investment options
      • SMSF investment
    • SMSF investment
    • Super fees and charges
      • Types of super fees
      • Top 10 cheapest super funds
      • Buy/sell spread costs
      • SMSF costs
      • Super taxes
      • Insurance premiums
      • Finding lost super reduces fees
    • Insurance and super
      • Life insurance: 10 important facts
      • Cheapest life insurance
      • Cheapest income protection
      • SMSFs and insurance
  • Super and tax
    • Super and tax: A Super Guide
    • Super and tax for beginners
    • Super tax tables: For under-60s
    • Super tax tables: For over-60s
    • Australian income tax rates and thresholds
      • Australian income tax rates
      • Senior Australians & Pensioners Tax Offset
      • Medicare levy
      • Low Income Tax Offset
      • Temporary Budget Repair Levy
      • Super rates and thresholds
      • Super tax rates for over-60s
      • Super tax rates for under-60s
      • Franked dividends (franking credits)
    • Contributions tax
      • Contributions tax: How it works
      • Division 293 tax
      • Low Income Superannuation Tax Offset
      • Excess contributions tax
    • Investment income tax (earnings tax)
      • How do the super tax rules work?
      • Capital gains tax and super
      • Franked dividends (franking credits)
      • Non-arm’s length income
      • Superannuation contributions tax
    • Retirement phase
      • How do the super tax rules work?
      • Superannuation payment options
      • Transfer balance cap
      • Exempt current pension income
      • Franked dividends (franking credits)
      • Non-arm’s length income
      • Superannuation benefit payments tax
      • SMSF pensions
      • Transition-to-retirement pensions
    • Superannuation benefit payments tax
      • Super tax tables: For under-60s
      • Super tax tables: For over-60s
      • Transfer balance cap
      • Superannuation death benefits
    • Superannuation death benefits
  • SMSFs
    • SMSFs: A Super Guide
    • SMSFs for beginners
      • How do SMSFs work?
      • Types of super funds
      • Is an SMSF right for you?
      • Enough super to justify costs?
      • Are you a typical SMSF trustee?
      • 10 SMSF commandments
      • Your SMSF C-A-R-T obligations
      • Setting up an SMSF
      • SMSF trustee declaration
    • SMSF costs
      • How much does an SMSF cost?
      • Enough super to justify SMSF costs?
      • SMSF ATO supervisory levy
      • SMSF audit fees
      • SMSF investment
      • Obtaining financial advice
      • SMSF penalties
    • SMSF administration and compliance
      • SMSF compliance for super beginners
      • Your SMSF C-A-R-T obligations
      • Doing it yourself or outsourcing
      • Finding the right administrator
      • Setting up an SMSF
      • SMSF record-keeping and reporting checklists
      • SMSFs and accountants
      • SMSF audits
      • SMSF administrative penalties
    • SMSF investment
      • Super investing for beginners
      • Drafting your SMSF investment strategy
      • SMSF asset allocation
      • Superannuation investment strategies
      • Types of super investments
      • Investment returns for 13 asset classes
      • Special SMSF investment rules
      • Franked dividends
      • SMSF borrowing
    • SMSF pensions
      • Retirement phase (formerly pension phase)
      • Types of super benefits
      • Starting an SMSF pension
      • Minimum super pension payments
      • Transition-to-retirement pensions
      • $1.6 million transfer balance cap
      • Actuarial certificates
    • SMSF borrowing
    • SMSF Q & As
  • Planning for retirement
    • Planning for retirement: A Super Guide
    • Retirement planning for beginners
      • How to plan for your retirement
      • When can you retire?
      • How long will you live?
      • How much super is enough?
      • 8 steps to super success
      • Superannuation investing for beginners
      • What is retirement phase?
      • Aspiring to a $1 million retirement
      • Retirement Calculators and Reckoners
    • What age can I retire?
    • Age-based Super Guide
    • How long will I live?
    • How much super do I need?
      • How much for a comfortable retirement?
      • Living on more than $60,000 a year
      • Living on more than $100,000 a year
      • Retirement Calculators and Reckoners
      • $1 million retirement (7% or 5% returns)
      • $1 million retirement (2% or 3% returns)
      • $1.6 million retirement
    • $1.6 million transfer balance cap
    • Types of super benefits
      • Taking a lump sum
      • Taking a super pension
      • SMSF pensions
      • Superannuation benefit payments tax
    • Will I get the Age Pension?
    • Obtaining financial advice
    • Retirement Calculators and Reckoners
      • How Much Super Is Enough Reckoner
      • Retirement Income Reckoner
      • Retirement Age Reckoner
      • Age Pension calculator
      • Annual Minimum Pension Payment Calculator
  • Accessing super
    • Accessing super: A Super Guide
    • 14 legal ways to withdraw your super
    • Definition of retirement
    • Reaching preservation age
    • Turning 65 and super
    • Types of super benefits
      • Taking a super lump sum
      • Taking a super pension
      • SMSF pensions
      • Superannuation benefit payments tax
    • Accessing super early
      • 14 legal ways to withdraw your super
      • Preservation age
      • Severe financial hardship
      • Compassionate grounds
      • Terminal illness
      • Permanent disability or permanent incapacity
      • Claiming insurance from super
      • Death
    • Divorce and super
    • Insurance and super
    • Leaving, living or working outside Australia
  • In retirement
    • In retirement: A Super Guide
    • Retirement Calculators and Reckoners
      • How Much Super Is Enough Reckoner
      • Retirement Income Reckoner
      • Retirement Age Reckoner
      • Age Pension calculator
      • Annual Minimum Pension Payment Calculator
    • Retirement phase (formerly called Pension phase)
      • Super tax rules
      • Types of super benefits
      • Transfer balance cap
      • Exempt current pension income
      • Franked dividends
      • Non-arm’s length income
      • Superannuation benefit payments tax
      • SMSF pensions
      • Transition-to-retirement pensions
    • Taking a super lump sum
    • Taking a super pension
      • Retirement phase
      • Types of super pensions
      • SMSF pensions
      • Transfer balance cap
      • Minimum super pension payments
      • Transition-to-retirement pensions
      • Defined benefit funds
      • Annuities
    • Working in retirement
      • Turning 65 and super
      • Over-65s work test
      • Transition-to-retirement pensions
      • Age-based Super Guide
      • Age pension age
    • Commonwealth Seniors Health Card
    • Age Pension rules
      • Latest Age Pension rates
      • How do the Age Pension rules work?
      • Age Pension age
      • 10 important facts about the Age Pension
      • How do I apply for the Age Pension?
      • Age Pension assets test
      • Age Pension income test
      • Age Pension deeming rules
    • Obtaining financial advice
    • Life expectancy and super
    • Superannuation death benefits
  • Saved articles

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