The Bring Forward Rule

One aspect of the non-concessional contributions limits is the ability to use up to three years’ worth of the contribution in one go.  This is called the “bring forward” rule.

What the “bring forward” rule means is that a super investor could as one contribution or over one financial year, contribute $450,000 of non-concessional contributions.  If this is done, the super investor will not be able to make any non-concessional contributions for the next two financial years.

For example, Bill could make a $450,000 non-concessional contribution on 1 July 2009 to his SMSF.  This contribution would exhaust his non-concessional contribution limits for 2009/10 (the year in which the contribution has been made) and for 2010/11 and 2011/12 financial years.  The rule would also apply if Bill made the $450,000 by two or more contributions during the 2009/10 financial year.

The “bring forward” rule could also apply in a situation where an amount of less than $450,000 is contributed in one financial year.

For example, Mary could make a non-concessional contribution of $200,000 on 19 October 2009 to her SMSF.  This contribution would invoke the application of the bring forward rule and Mary could make further non-concessional contributions of $250,000 during the next two financial years.  If Mary, on 15 July 2010, made a non-concessional contribution of $60,000, she would have exhausted $260,000 of her $450,000 limit.  Mary would then only be able to make $190,000 of non-concessional contributions for 2010/2011 and 2011/12 financial years.