Reducing the non-concessional contribution cap to $100,000 pa

Article published by RJS Wealth Management Pty LtdA non-concessional contribution is an after-tax contribution made to superannuation (super). The 2016 Federal Budget originally proposed a $500,000 lifetime cap on non-concessional contributions. This measure has now been scrapped and replaced with a $100,000 per annum non-concessional contributions limit (reduced from $180,000) which will take effect on 1 July 2017.The $100,000 cap will be indexed in $10,000 increments in line with the $25,000 concessional (before-tax) cap, which will be indexed in $2500 increments, and which will also take effect from 1 July 2017.Individuals with a super balanced of $1.6 million will no longer be eligible to make non-concessional contributions.What are the current non-concessional rules?Current legislation allows $180,000 per annum of after-tax contributions to be made to your super fund. As well as allowing 3 years’ worth of contributions ($540,000) to be brought-forward. Bringing forward contributions allows you to contribute 3-years’ worth of contributions in one financial year with zero non-concessional contributions made in the following 2 financial years. These super rules will remain in place until 30 June 2016.Can I still use the bring forward rule under the new reforms?For those with a super balance of less than $1.3 million, the answer is Yes, you will still be able to bring forward 3 years’ worth of cap, allowing $300,000 of contributions to be made in a single financial year with zero non-concessional contributions made in the following 2 financial years. Effectively reducing the amount of after-tax contributions an individual can contribute to superannuation by $240,000 over a 3 year period.For individuals with a super balance of less than $1.4 million the answer is still yes, but you will only be able to bring forward 2 years’ worth of contributions ($200,000).

Superannuation can be complicated. To find out how these and other superannuation reforms affect you, what action you should take or to simply ask a question, ontact an RJS Wealth Management Professional on 1300 256 526. In many circumstances, it may be ideal to take action now.Related articles:

• Introducing a $1.6 million transfer balance cap
• Reducing the concessional contributions cap to $25,000
• Increasing income eligibility for the spouse contribution tax offset
• Abolishing the anti-detriment payment. Is the death tax back?
• Removing tax exempt earnings for transition to retirement income streams
• Lowering the threshold for Division 293 tax to an annual income of $250,00

Source: SuperGuide.com.au, MLCThis blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.