Contribute $450,000 into Super

The Bring-Forward rule

For the 2013/2014 year, the annual non-concessional (after-tax) contribution limit is $150,000, although if you are under the age of 65 the bring-forward rule means that you can bring forward two years of non-concessional contributions, so that you can contribute $450,000 to your fund, if you have the money.

Protection against exceeding the annual non-concessional contribution limit of $150,000

If you’re aged 64 (or under), when you contribute more than $150,000 in non-concessional contributions in a financial year, you automatically trigger the bring-forward rule for the following two years.  You can contribute $300,000 in the first year and the balance of $150,000 over the following two years, or any financial combination that adds up to $450,000 over the 3-year period.

You would only be subject to penalty tax of 46.5% if you exceed $450,000 in non-concessional contributions in one year, or you exceed $450,000 in non-concessional contributions over the 3-year period.

If you’re aged 65 or over however contributing more than $150,000 in non-concessional contributions in one year means that you exceed the contributions level and the excess contributions will be subject to the 46.5% penalty tax.

Maximising the benefit of the bring-forward rules

The annual after-tax contributions limit applies to each member of the fund, which means that a couple can make up to $300,000 in non-concessional contributions for the 2013/2014 year or as much as $900,000 over a three-year period.  If the bring-forward rules are invoked, a couple could even make one single $450,000 contribution each in year 1.

Year 1 – $0, Year 2 – $0 and Year 3 – $450,000.  Is this OK?

No – the ‘bring forward’ rule only relates to contributions for future years, not past years.  If you fail to utilise your non-concessional limit for one or more years, then the limit for those years is lost forever.

Year 1- $200,000, Year 2- $250,000 and Year 3 – $150,000. Is that OK?

No – The $200,000 after-tax contribution during the 2013/2014 year (Year 1) triggers the bring-forward rule for the next two years 2015 & 2016 (Years 2 and 3). You only make a further $250,000 in non-concessional contributions during the two-year period that ends on 30 June 2016 (Years 2 and 3). You could next make a non-concessional contribution in Year 4, (provided you are under the age of 65).

Strategies if you are 63 or 64 during the financial year.

You can make a $450,000 non-concessional contribution before you turn 65, representing your limit for this year and the next two years, without satisfying the over 65 year old “Work test” that would normally apply to contributions that cover future years.

Strategies if you are 64 and turning 65 during a financial year.

If you are under the age of 65 on 1 July of a financial year, then they can take advantage of the bring-forward rule during that entire financial year. So if you turn 65 in the financial year you can still make a $450,000 non-concessional contribution in that financial year, assuming they have not previously triggered a bring-forward that covers this financial year.  You will have to satisfy the “Work test” before contributing. The Work Test involves working 40 hours over a 30-day period in the financial year in which you make the contribution.

Strategies if you are 65 or over.

The bring-forward rule is not available if you’re aged 65 or over. For the 2013/2014 year, the maximum you can contribute is $150,000 in a single financial year, and they must also satisfy a “Work test”. If you exceed the $150,000 non-concessional limit, then the excess contributions are subject to the 46.5% penalty tax.

74 Years Old

The annual non-concessional cap of $150,000 is available until you reach the age of 74.

If you need some help understanding the complex rules around Superannuation,
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