On 1 July 2024 the concessional contribution cap (indexed to movements in Average Weekly Ordinary Time Earnings) will increase from $27,500 to $30,000. The non-concessional cap, which is set at four times the concessional cap, will increase from $110,000 to $120,000. The general transfer balance cap remains unchanged.
Clients are probably aware of the rules which permit a super fund member to make a non-concessional contribution of up to three times the general non-concessional contributions cap, by bringing forward the non-concessional caps for up to the next two years.
These indexation changes will have a significant effect of the tests used to calculate if the non-concessional contributions caps of future years can be brought forward.
The first test compares the member’s total super balance at the previous 30 June to the general transfer balance cap (currently $1.9m) in the year the bring forward is triggered.
These situations translate into the following table with the indexation of the non-concessional contributions cap from 1 July 2024:
|
Total super balance on 30 June of previous year |
Non-concessional contributions cap for the first year |
Bring-forward period |
|
Less than $1.66m |
$360,000 |
3 years |
|
$1.66m to less than $1.78m |
$240,000 |
2 years |
|
$1.78m to less than $1.9m |
$120,000 |
No bring forward period. |
|
$1.9m or more |
Nil |
Non-concessional contributions cap is zero. |
The maximum amount of the brought forward cap is set by reference to the general non-concessional cap applicable in the year the bring forward is triggered. So if you trigger a bring forward on or before 30 June 2024, the increased non-concessional caps which would otherwise apply in 2025 and 2026 are ignored.
There may be situations where two or three years of non-concessional contributions caps are brought forward but the full amount of possible non-concessional contributions is not made in the first year. In this case the member’s total super balance at the previous 30 June must be measured against the general non-concessional contributions cap in each of the second and third years, and this might rule out making planned contributions in those years. No non-concessional contribution can be made in a year where the member’s total super balance on the previous 30 June is equal to or greater than the general transfer balance cap for that year, currently $1.9m.
The second test concerns the member’s age. The member must be under 75 years of age at any time in a financial year.
With these changes, clients should take care in deciding whether to trigger the bring forward before or after 30 June 2024, and whether to use the full brought forward cap in one year. Please contact your Nexia advisor if you have any questions or need any further information or advice.
