Australian superannuation contribution caps: concessional, non-concessional and bring-forward

What the caps are

Australian superannuation contribution caps limit the amount individuals can contribute to their superannuation fund while retaining certain tax benefits. There are two main contribution caps: a concessional contributions cap and a non-concessional contributions cap. Concessional contributions are taxed at 15% within the superannuation fund, while non-concessional contributions are made with after-tax personal income.

Exceeding either cap results in additional tax obligations. Excess concessional contributions are included in an individual’s assessable income and taxed at their marginal rate, with a 15% offset applied. Excess non-concessional contributions can either be released from the superannuation fund or attract additional tax.

The values of these contribution caps are adjusted periodically to reflect changes in the economy. The Australian Taxation Office (ATO) announces the indexed cap amounts before the start of each financial year, based on movements in Average Weekly Ordinary Time Earnings (AWOTE).

The bring-forward rule

The bring-forward rule allows members under 75 with a total super balance below a certain threshold to make additional non-concessional superannuation contributions. This enables a member to effectively triple the usual annual non-concessional contribution cap for a single year.

However, utilising the bring-forward arrangement has implications for future contribution flexibility. A member who chooses to bring forward contributions will be unable to make further non-concessional contributions for the subsequent two financial years.

Eligibility for the full bring-forward amount is determined by the member’s age and total super balance at the beginning of the relevant financial year.

Carry-forward unused concessional cap

Members may be able to utilise unused concessional contribution cap amounts from previous financial years. This ability is available to individuals whose total superannuation balance is under $500,000 at the beginning of the financial year in question.

The carry-forward provision allows for flexibility, assisting individuals with fluctuating income or those who have not previously made concessional contributions to increase their superannuation savings. The maximum carry-forward period is five years. compliance calendar tool

This mechanism is designed to help members maximise their concessional contributions where circumstances allow.

Where to verify the current figures

The specific dollar amounts for concessional and non-concessional superannuation contribution caps are determined annually and released by the Australian Taxation Office (ATO). These figures are subject to indexation, meaning they can vary from one financial year to the next.

To ensure accuracy, it is essential to verify the current cap amounts before making any decisions regarding superannuation contributions. The ATO website, ato.gov.au, is the authoritative source for this information.

The Transfer Balance Cap, which limits the total amount that can be moved into retirement-phase income streams, is also indexed, and its figures are similarly available on ato.gov.au.