Non-Concessional Contributions – to bring forward in 2011/12 or not

15 July 2011

The concessional contribution limit for 2011/12 financial year is $25,000.  The non-concessional contribution cap is set at 6 times the concessional cap.  The “bring forward” non-concessional contributions cap is set at 18 times the concessional cap.

If the concessional cap were to tick over from $25,000 to $30,000, there would be a significant flow on effect to the other contribution caps.  Namely, the non-concessional contribution cap would be $180,000 (up from $150,000) and the “bring forward” non-concessional contributions cap would be $540,000 (up from $450,000).

If this tick over of the concessional cap occurs in 2012/13, it would have the effect of altering the “bring forward” non-concessional contributions cap to $540,000 for 2012/13 and the next two financial years.  Triggering the “bring forward” in 2011/12 (by making more than $150,000 of non-concessional contributions in 2011/12) will exclude the higher non-concessional contributions cap applying for the next two financial years.

The key issue is whether the tick over will occur in the 2012/13 financial year.  The cap will only increase once the underlying indexed amount breaks the $30,000 ceiling, as the cap will only change in increments of $5,000.

Consequently, it may be advantageous (if circumstances permit) to delay triggering the “bring forward” of non-concessional contributions for the 2011/12 financial year until the ATO has issued the superannuation thresholds which are to apply for 2012/13.

In past years the ATO has issued superannuation thresholds for the next financial year during the preceding May or June.

Example

If the tick over to $30,000 occurs in 2012/13, then not invoking the “bring forward” in 2011/12 means that over the 4 years to 30 June 2015, $690,000 could be contributed as non-concessional contributions without exceeding the relevant caps.

Alternatively, invoking the “bring forward” in 2011/12 means that over the 4 years to 30 June 2015 only $630,000 could be contributed as non-concessional contributions without exceeding the relevant cap.

  2011/12    2012/13   2013/14   2014/15   Total   
Bring forward in 2011/12   
$450,000      Nil Nil  $180,000   $630,000  
Bring forward in 2012/13 $150,000 $540,000   Nil Nil $690,000  

 

Notes:

  1. Concessional contribution cap altered to $30,000 in 2012/13 and remains unchanged to 2014/15.
  2. Only considering ordinary non-concessional contributions (not personal injury or CGT contributions).
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