More Australians can make up to three years’ worth of non-concessional super contributions in the same financial year, with the government increasing the age limit from under 65 to under 67.
In recent weeks the government announced that Australians aged 65 and 66 (to be specific, under the age of 67 at the start of the tax year), would be able to make up to three years of non-concessional super contributions under bring-forward rules. Previously, bring-forward rules only applied to those under age 65.
Below we explain what non-concessional contributions are, where bring-forward rules come into it, why this could be good news for you and what other rules have changed for this age group in recent times.
Non-concessional contributions are voluntary contributions you can make using after-tax dollars (such as when you transfer funds from your bank account into your super), which you don’t claim a tax deduction for.
Currently, the annual non-concessional contributions cap is $110,000.
Apart from non-concessional contributions, there are also concessional contributions and limits to the amount of both types of contributions you can make each year.
What are the bring-forward rules?
The bring-forward rules apply to non-concessional contributions only.
These rules allow you to make up to three years of non-concessional contributions in a single income year, if you’re eligible. This means you can put in up to three times the annual cap of $110,000, which means you may be able to top up your super by $330,000 within the same financial year.
However, how much you can make as a non-concessional contribution will depend on your total super balance as at 30 June of the previous financial year. More on this below.
How could the bring-forward rules benefit me?
If you’ve reached your concessional contributions cap, received an inheritance, or have money from the sale of a large asset, non-concessional contributions may be a good way to top up your super.
However, contribution caps limit the amount you’re able to put into super in a single year, which is where bring-forward rules may be helpful, as they could allow you to make a much larger non-concessional contribution, or more non-concessional contributions, than you’d otherwise be able to make in 12 months.
How does my total super balance cap affect bring-forward rules?
Your total super balance may impact your ability to contribute up to three years of non-concessional contributions under the bring-forward rules.
Currently, your total super balance must be below $1.48 million, as at 30 June of the previous financial year, for you to be able to contribute up to three years of annual caps ($330,000) under the bring-forward rules.
If your total super balance rises above this level, your ability to bring forward future year caps may be reduced, or no longer available at all, meaning only the standard annual cap (or no cap at all) may be available.
See the table below to get an idea of what you may be able to contribute under the bring forward rules.
|Your total super balance cap on previous 30 June||Your non-concessional
|Under $1.48 million||$330,000||Three years|
|$1.48 million - $1.59 million||$220,000||Two years|
|$1.59 million - $1.7 million||$110,000||One year / standard annual cap|
|Equal to or above $1.7 million||$0||N/A|
Recap of other recent rule changes
More money can be put into super across the board
Annual concessional and non-concessional contribution caps increased on 1 July 2021. As a side note, concessional contributions include SG contributions and salary sacrifice contributions (if you’re still working) and tax-deductible personal contributions.
More super can be transferred into a retirement pension
The amount of super that can be transferred into a retirement pension (regardless of how many pension accounts you might have) increased from $1.6 million to $1.7 million on 1 July 2021, but not for everyone.
How much you can transfer comes down to whether you moved money from your super account into a retirement pension before 1 July 2021 and how much you might’ve moved. Get the full picture.
Fewer people have to meet the work test
Since 1 July 2020, the work test applies only to people aged 67 to 74, after which time you’re generally ineligible to make voluntary contributions into your super, unless you’re making a downsizer contribution.
Prior to this, the work test applied to people aged 65 and 66 as well, meaning more people can now top up their super without having to meet work test requirements.
To recap, the work test requires you to be in paid work for at least 40 hours over a consecutive 30-day period in the financial year to make voluntary super contributions, which includes non-concessional contributions.
You might also be interested to know that the government has proposed scrapping the work test for those making non-concessional and salary sacrifice contributions from 1 July 2022, but this is yet to be legislated.
Note, there has been no changes to the work text exemption, which continues to apply to people aged 67 and over.
More people can receive spouse contributions
The government also increased the cut-off age for spouse contributions from 69 to 74 from 1 July 2020. This means a receiving spouse can build their super for longer, assuming they continue to meet the work test from age 67.
Note, contributions received by a spouse also count toward their non-concessional contributions cap. Other rules also apply. Find out more about spouse contributions.
What other things should I be across?
If you exceed super contribution caps, additional tax and penalties may apply. The value of your investment in super can also go up and down, so before making extra contributions, make sure you understand, and are comfortable with, any potential risks.
Speak to a super coach
If you’re a SignatureSuper, CustomSuper or AMP Flexible Super member and would like to know more about your super, you can book a complimentary 20-minute super coaching session.
Tune in to our Simplifying Super podcast series
If you’ve ever had questions about your retirement savings, our in-house experts break it down in simple terms in our Simplifying Super podcast series. You can join us on:
Oliver’s Insights – Five ways to turn down the noise and stay focused as an investor20 July 2021 | Grow my wealth AMP Chief Economist Shane Oliver explains how Australian investors can avoid getting distracted and focus on long-term success. Read more
The Work Test And Work Test Exemption Explained13 July 2021 | Grow my wealth If you’re aged 67 to 74 and want to make voluntary super contributions, you must meet a work test, unless you qualify for an exemption. See what you need to know. Read more
Super contribution rules when you’re in your 60s and 70s09 July 2021 | Grow my wealth Know your options around making contributions, accessing your super savings and when Age Pension entitlements could be affected. Read more
What you need to know
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