Three year bring forward which straddle 1 July 2017 - Special transitional rules

It seems special transitional rules will apply where a “bring forward” period straddles 1 July 2017.

The first special rule is that if the bring forward can be completed by 30 June 2017, then the $540,000 cap will apply.

The second special transitional rule is that if the bring forward is not completed by 30 June 2017, then the maximum amount of non-concessional contributions which can be made in 2017/18 and 2018/19 will be limited to the unused portion of the maximum bring forward amount.  

These special transitional rules are illustrated in the following examples.  It is assumed that other requirements for a bring forward are satisfied (eg under age 65 and superannuation balance less than $1.6m).  The first year of the “bring forward period” is 2016/17.

Example 1:  

Bill decides to make a $540,000 non-concessional contribution in May 2017.  If Bill is able to make the contribution in its entirety before 1 July 2017, then the contribution can be made and retained by the fund.

Example 2  

Bert, unfortunately, cannot make the entire $540,000 contribution before 1 July 2017.  He has made a non-concessional contribution of $400,000 before 1 July 2017.  While the $400,000 can be retained by the fund (as it is within the non-concessional cap which applies for 2016/17), Bert has lost the opportunity of making any further non-concessional contributions in the 2017/18 or 2018/19 financial years.  This follows as Bert’s maximum bring forward amount for the 3 year period 2016/17-2018/19 is $380,000.  As he has exceeded that amount before 1 July 2017, the entire amount can be retained by the fund (because it is within the non-concessional contribution cap which applied for 2016/17).

Example 3  

Dagobert has been able to only make a $325,000 non-concessional contribution before 1 July 2017.  As this amount is less than the maximum bring forward amount for the 3 year period commencing 1 July 2016 (which is $380,000), he can make further non-concessional contributions in the financial years 2017/18 and 2018/19 totalling $55,000 (which is the shortfall between the actual amount contributed and Dagobert’s maximum bring forward amount).

Comments:  The above examples are based upon our understanding of underlying principles.  Two significant points need to be made.  First, there is a last opportunity to make a $540,000 non-concessional contribution before 1 July 2017.  This will apply if the taxpayer has not triggered a “bring forward” in 2014/15, 2015/16 or 2016/17 and is under age 65 at any time during the 2016/17 financial year.  In this situation, the taxpayer can make a $540,000 non-concessional contribution irrespective of their current superannuation balance.  The only condition is that the entire contribution must be made before 1 July 2017.  
The second, is that by triggering a “bring forward” in 2016/17 does not preserve any portion of the $540,000 which is unpaid by 1 July 2017 and which exceeds $380,000 (being the actual bring forward amount applying to the 3 year period commencing 1 July 2016).