Q: I understand the bring-forward strategy, which allows up to $330,000 or three years after tax contributions (3 times $110,000) to be made in a single year, or alternatively, various amounts up to $330,000 over a three-year period. If you take this up but contribute, say, only $300,000, so $30,000 short in the three years, then in year four, are you able to contribute after tax of $110,000 plus the $30,000 shortfall from years one to three?
A: The contribution rules are anything but easy, especially when you look at the rules around the carry-forward or the bring-forward rules. It’s not easy but the way I like to explain it is, essentially, in the very first year where you make a non-concessional contribution above the annual limit, so in this case, above $110,000, as soon as that contribution goes above $110,000 for the year, you trigger, you automatically enter the three year bring-forward period.
So, as soon as our contributions in year one or in the first year you go above $110,000, that becomes the first year of the three year bring-forward rule, which means that year and the next two financial years, we can put in a total of $330,000.
Now, at the end of that third year, it resets. So, if you haven’t used up all of that $330,000, you lose it. So, use it or lose it, essentially, over that three-year period. So, it would then restart in that next period where you would have the $110,000. Or again, you could trigger the bring-forward rule to make that $330,000 contribution under the bring forward rule. So, it’s essentially a use it or lose it over those three years.
Now, we’ve also got some pretty good articles and guides on the website. I’ve just given you there three or four articles which cover the non-concessional contribution rules. Particularly, there was one released in July this year which is a guide to the bring-forward rule. Probably a good source of information if you’re looking for more on that.
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