Three year bring forward

The ability to bring forward up to 3 years’ worth of non-concessional contributions will be retained.  The current requirement that taxpayers be less than age 65 at any time during the first year of the 3 year bring forward period will be maintained.  

Currently, the maximum bring forward amount is $540,000.  From 1 July 2017, the maximum bring forward amount will be reduced to $300,000.

It seems (at least to us) that if the 3 year “bring forward period” straddles 1 July 2017, then the maximum bring forward will be determined by aggregating the non-concessional contributions cap which applies to each of the 3 years of the “bring forward period”.

Situation 1 – Financial Years 2015/16, 2016/17 and 2017/18

In this example, 2 financial years occur before 1 July 2017 and one financial year occurs after 30 June 2017.  The relevant caps for each financial year are $180,000 (15/16); $180,000 (16/17) and $100,000 (17/18).  Consequently, the maximum bring forward will be $460,000.  However, this will be subject to a special transitional arrangement – which is discussed below.

Situation 2 – Financial Years 2016/17, 2017/18 and 2018/19

In this situation, one financial year occurs before 1 July 2017 and the other 2 financial years occur after 30 June 2017.  The relevant caps for each financial year are $180,000 (16/17); $100,000 (17/18) and $100,000 (18/19).  Consequently, the maximum bring forward will be $380,000.  However, this will be subject to a special transitional arrangement – which is discussed below.

The factsheet for the $1.6m threshold provides the example of “Molly”.

Molly’s superannuation balance at 1 July 2016 is $200,000 and she is aged 40.  In respect of 2016/17 financial year she contributes $250,000.  This contribution exceeds $180,000 (the relevant non-concessional cap for the 2016/17 financial year), consequently, Molly has triggered the “bring forward” of non-concessional contributions.  The first year of the 3 year “bring forward period” is 2016/17.  The maximum bring forward amount is $380,000.  As she has contributed $250,000 in the first year, she can contribute up to $130,000 over the second and third years of the “bring forward” period.  

In the example, Molly contributes $110,000 in the second year (ie 2017/18) and contributes $20,000 in the third year (ie 2018/19).  Consequently Molly has exhausted her “bring forward” cap and cannot make any further non-concessional contributions for the 3 years of the “bring forward period”.  In Molly’s case the “bring forward cap” will be reset for the 2019/20 financial year.

Situation 3 – Financial Years 2017/18, 2018/19 and 2019/20

In this example, all 3 financial years occur after 30 June 2017 and the non-concessional contributions cap for each of the financial years is $100,000.  Consequently, the maximum bring forward will be $300,000.