Contribution rules changed substantially from 1 July 2017.

The reduction of the non-concessional contributions cap to $100,000 per person per year from 1 July 2017 has been widely discussed.

There are some other changes that are equally as important and easy to overlook.

Total superannuation balance condition

There is also an additional new restriction on non-concessional contributions that can be easily overlooked. Where a person’s ‘total superannuation balance’ is $1.6 million or more at 30 June, then that person’s non concessional contributions cap in the following year is zero. This means any non-concessional contributions made for that person will be excess in that following year.

Three-year bring-forward

The three-year bring-forward rule has also been made more complicated, and, where it is triggered on or after 1 July 2017, is broadly summarised in the following table:

Total superannuation balance just before the start of year one Non-concessional contributions cap To be used over
Under $1.4 million $300,000 3 years
$1.4 million to under $1.5 million $200,000 2 years
$1.5 million to under $1.6 million $100,000 1 year
$1.6 million and over Nil Nil

The three-year bring-forward rule is still only available to someone under 65 at some stage in year one.

Before a person makes non-concessional contributions, it is very important that their ‘total superannuation balance’ just before the beginning of that financial year is known. This means that there must be an even greater emphasis on keeping SMSF financial information up to date.

The restrictions on trustees of superannuation funds accepting contributions for people over 65 remain.

Non-concessional contributions caps have never been more complicated, and will have a major impact on superannuation strategies, particularly those involving SMSFs.