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In the run-up to retirement, putting some extra money into your super account can be a sensible idea. The same goes if you are lucky enough to receive an inheritance or sell a large asset.
But the contribution caps (or limits) can make it tricky to get a large amount of money into your super account in a single year.
One solution can be to use a bring-forward arrangement. To help you understand how this works, SuperGuide has put together an easy explainer covering the key rules.
What is a bring-forward arrangement?
Although it sounds complicated, bring-forward contributions are just what they sound like – you bring forward your non-concessional contributions caps (or limits) from future years and use them in a shorter time period.
The bring-forward rules allow you to advance your non-concessional contributions caps from a three-year period and use them over a shorter period – either all at once or as several larger contributions.
From 1 July 2021, the annual general non-concessional (after-tax) contributions cap is $110,000. From 1 July 2017 to 30 June 2021, the annual non-concessional contributions cap was $100,000.
If you meet all the eligibility criteria, the bring-forward rules allow you to make non-concessional contributions of up to three times the annual general contributions cap in a single year (3 x $110,000 = $330,000 in 2021-22).
Who is eligible to use a bring-forward arrangement?
If you want to use the bring-forward rules, you need to check you meet all of the eligibility criteria before you make your contribution:
1. Total superannuation balance (TSB)
To make any non-concessional contribution, your total superannuation balance (TSB) must be less than $1.7 million (in 2021-22) on 30 June of the financial year before the one in which you want to make your contribution. From 1 July 2017 to 30 June 2021, the TSB limit for using a bring-forward arrangement was $1.6 million.
From 1 July 2021, if your TSB is $1.48 million or over on 30 June of the previous financial year, you will be limited in the available amount of bring-forward contributions you can make:
Bring-forward contribution amounts for 2021-22
| Total superannuation balance | Contribution and bring-forward available |
|---|---|
| Less than $1.48m | 3 years of caps ($110,000 x 3 = $330,000) 3 years bring-forward period |
| $1.48m to less than $1.59m | 2 years of caps ($110,000 x 2 = $220,000) 2 years bring-forward period |
| $1.59m to less than $1.7m | 1 years of caps ($110,000 x 1 = $110,000) No bring-forward, general non-concessional contributions cap applies |
| $1.7 million or more | Nil |
2. Age limits
If you are aged under 67 on 1 July of the financial year, you can make non-concessional contributions up to the annual cap ($110,000 in 2021-22) and use the bring-forward rules. You are not required to be working. (See box below for age limit rules applying in previous years.)
If you trigger a bring-forward arrangement in a financial year and subsequently reach age 67 during the three-year bring-forward period, you will need to meet the requirements of the work test or work test exemption if you want to make additional contributions under your bring-forward arrangement.
For example, if you contribute $200,000 in Year 1 at age 65 and then turn 66 in Year 2 and would like to contribute another $50,000 in that year and another $50,000 in Year 3 at age 67, you will need to meet the requirements of the work test or work test exemption in the third year when making your final bring-forward contribution.
If you are aged 67 to 74 on 1 July of the financial year, you are not permitted to start a bring-forward arrangement and you are limited to the normal annual general non-concessional cap ($110,000 in 2021-22). (See box below for rules during 2021.)
If you are aged 75 and over on 1 July of the financial year, generally you are not permitted to make a non-concessional contribution, so you cannot use the bring-forward rules.
3. Triggering bring-forward arrangement
If you want to commence a bring-forward arrangement in a particular financial year, you must not have already triggered a bring-forward arrangement in the previous two years.
It’s possible to accidentally trigger a bring-forward arrangement in a previous financial year without realising it. Before making personal contributions into your super account, consider all the contributions you have made to all your super funds, as excess concessional (before-tax) contributions are also counted towards your non-concessional contributions cap.
How do I start a bring-forward arrangement?
Starting a bring-forward arrangement is easy.
You don’t need to notify your super fund or the ATO, or even fill in an application, as your super fund automatically reports all contributions made into your super account to the ATO.
If you are eligible to make non-concessional contributions and you make contributions greater than the annual general cap ($110,000 in 2021-22), you automatically gain access to your future years of contributions caps. This is referring to as triggering the bring-forward rules.
Background of the bring-forward caps
Over the years, the government has progressively reduced the non-concessional contributions cap and bring-forward limits. If you started a bring-forward arrangement in 2014-15, for example, the bring-forward cap was $540,000, which is much higher than the current $330,000 limit.
The table shows the non-concessional caps available in previous years:
| 2014/2015 | 2015/2016 | 2016/2017 | 2017/2018 | 2018/2019 | 2019-2020 | 2020/2021 | |
|---|---|---|---|---|---|---|---|
| Annual contribution cap | $180,000 | $180,000 | $180,000 | $100,000 | $100,000 | $100,000 | $100,000 |
| Maximum contribution permitted over 3-year period under contributions rules applying at that time | 0 to $540,000 | ||||||
| 0 to $460,000 | |||||||
| 0 to $380,000 | |||||||
| 0 to $300,000 | |||||||
| 0 to $300,000 | |||||||
Source: ATO
Found this article very helpful and examples are good to get a better grasp of the different scenarios.