The big news is

The Big News is the increase in the “ordinary” concessional contribution cap from $25,000 to $30,000 and the flow on effect of this increase on the non-concessional contribution cap and the “bring forward” cap.

SMSF advisers and their clients will have to consider whether to trigger the application of the bring forward in 2013/14 (thereby making 2013/14 the first year and locking in $450,000 non-concessional contribution cap for three years) or delaying the contributions and triggering the application of the bring forward for the 2014/15 financial year (thereby making 2014/15 the first year and locking in $540,000 of non-concessional contribution cap for three years).

Over the four year period from 2013/14 to 2017/18 an SMSF investor could contribute, in total, $630,000 of non-concessional contributions if the bring forward is triggered in 2013/14 or, alternatively, the same SMSF investor could contribute, in total, $690,000 of non-concessional contributions if the bring forward is triggered in respect of the 2014/15 financial year.  In both situations the SMSF investor need not incur excess contributions tax as shown below

Contribution Pattern

In Strategy A, the bring forward is triggered in 2013/14 and the maximum contribution (without incurring excess contributions tax) has been made.  This precludes the SMSF investor from making non-concessional contributions in respect of the balance of the “bring forward” period.  The SMSF investor can next make a non-concessional contribution in 2016/17.

In Strategy B, the “bring forward” is triggered in 2014/15 and the maximum contributions (without incurring excess contributions tax) for 2013/14 and 2014/15 have been made.  The SMSF investor can next make a non-concessional contribution in 2017/18.

This illustration only applies to “ordinary” non-concessional contributions.  A separate contribution cap applies to CGT non-concessional contributions.  Personal injury non-concessional contributions are not subject to any contribution cap.