
Reading time: 5 minutes
On this page
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 after-tax money into your super account in a single year. One solution is to use a bring-forward arrangement.
Removal of the work test for making bring-forward contributions and changes to the upper age limit from 1 July 2022 mean many older Aussies will now be able to take advantage of the opportunity these arrangements provide to give your super account a major boost.
Bring-forward rules from 1 July 2022 – Changes to the work test and age limits
In 2021–22, you need to be under age 67 during the financial year to take advantage of the rules relating to bring-forward arrangements. From 1 July 2022, the age limit for using these arrangements increases to age 75, allowing people in their early 70s to commence a bring-forward arrangement.
If you’re under age 75 at any time in a financial year you may be eligible to make a contribution of up to three times the annual general non-concessional cap in that financial year. In fact, you actually have a little extra time. If you are turning 75, you have up to 28 days after the end of the month in which you turn 75 to make a personal contribution to your super fund, although it’s wise not to leave it to the last minute as your super fund may not process it immediately.
From 1 July 2022 onwards, if you’re aged less than 75, you also no longer need to meet the work test (or work test exemption) for your super fund to be permitted to accept your non-concessional contributions. So, even if you’re not working you will be able to use the bring-forward rules.
The ATO gives the following example of how Aussies in their early 70s can use the bring-forward arrangement from 2022–23 onwards:
Bernard is 74 years old on 1 July 2022. His non-concessional contributions (NCC) cap for 2022–23 is $110,000. His total super balance at 30 June 2022 is $800,000.
Bernard’s age makes him eligible for the bring-forward arrangement. During the financial year he makes the following non-concessional contributions to his super fund:
- $75,000 in October 2022
- $75,000 in April 2023.
Bernard has automatically triggered a bring-forward arrangement by contributing more than the general NCC cap in the 2022–23 financial year.
What is a bring-forward arrangement?
Although it sounds complicated, bring-forward contributions are just what they sound like – you may be eligible to automatically bring forward your non-concessional contributions caps (or limits) from future years and use them in a shorter time period. This allows you to make extra non-concessional contributions in a single year without paying extra tax.
Bring-forward arrangements are different from carry-forward contributions, which involve using previously unused concessional (before-tax) contributions cap on a rolling five-year basis. Bring-forward arrangements, on the other hand, involve non-concessional contributions.
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. Your personal NCC cap may be different, depending on the amount you already have in super (see section on Total Super Balance below).
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 non-concessional contributions cap in a single year (3 x $110,000 = $330,000 in 2021–22 and 2022–3).
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 three eligibility criteria before you make your contribution:
Eligibility criteria 1 – Age
Rules for 1 July 2020 – 30 June 2022
If you are aged under 67 on 1 July of the financial year, you may be eligible to make non-concessional contributions up to the annual cap ($110,000 in 2021–22 and 2022–23) and use the bring-forward rules. You are not required to be working.
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 and 2022–23).
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.
Rules for 1 July 2022 and later years
If you are under 75 years of age at any time in a financial year you may be able to make non-concessional contributions of up to three times the annual general non-concessional cap in that financial year. You must be under age 75 for at least one day during the triggering year (the first year) and not already be in an active bring-forward period.
If you are 75 years or older your fund may only be able to accept employer contributions and downsizer contributions.
Eligibility criteria 2 – 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 and 2022–23) 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:
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 and 2022–23
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 |
Eligibility criteria 3 – Triggering a 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 and be in what the ATO terms an ‘active bring-forward period’.
You are automatically considered to be in an active bring-forward period if you contribute more than the annual NCC cap ($110,000 from 2021–22).
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 and 2022–23), you automatically gain access to your future years of contributions caps. This is referred to as triggering the bring-forward rules.
Background of the bring-forward caps
Over the years, the government has progressively changed the NCC 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 the years prior to the 2021–22 increase in the contribution cap to $110,000:
2014–15 | 2015–16 | 2016–17 | 2017–18 | 2018–19 | 2019–20 | 2020–21 | |
---|---|---|---|---|---|---|---|
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.