Ask An Adviser - What is the Maximum Non-Concessional Contribution I Can Make To My Super? (1)

Top answer provided by:

Andy Darroch

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Hi Seamus,

Great question. Now like all of the answers in these series, we’re obliged to slander a heavy dose of “it depends” and you’ve got to bear in mind all of our responses are general advice only. Just a very quick shameless tag, There’s a tonne of this information on our website; www.advisemetoday.com.au!

The simple answer:

The maximum non-concessional contribution a person can make is $330,000. This is comprised of a full three years of non-concessional contributions, which are limited at $110,000 per annum, however by using the bring forward rule, you will find yourself using up three years in one go.

There are conditions to this and there are also exceptions.

Non-concessional contribution cap

The annual limit for a non-concessional contribution is $110,000. Now, this is for a single year. There are also conditions as to whether a person can make a non-concessional contribution. Namely, are you under the age of 75, and was your superannuation balance less than $1.7 million as at 30 June 2022.

Bring forward

What’s three times better than one year? Well…. Probably three years? And that’s just what the “Bring-forward rule” permits you to do. A person can use three financial years, in one single year. So, so a person has a bundle of cash, well rather than making $110,000 each year for three separate years, they can do it in one. Now, this counts for all three years, so if someone made a bring forward contribution in the 2022-23 financial year, they won’t be able to make another non-concessional contribution until 1 July 2025 for the 2025-26 financial year.

Secondly, there are restrictions more than just being under 75. In order to use the full three years, your superannuation needs to have been less than $1.48 million as at 30 June 2022. If it’s more than $1.48 million but less than $1.59 million, then, you can only use two years.

A better way? Four years in two?

What is a rather common strategy, for someone who satisfies all the relevant criteria and wants to maximise their contribution, e.g. more than $330,000. Is, rather than using the bring-forward and then waiting a full three years before making another is to do the reverse. Say it’s July in 2022, as it is. And you’ve got a tonne of cash to contribute to super. Say $500,000.

Well rather than doing $330,000 now and then waiting until 1 July 2025. What we might do, is to contribute $110,000 now. Then $330,000 on 1 July 2023. Now, the time of year right now is a poor example, as this is a lot more effective if say we were having this conversation in May of next year. The closer we get to the end of financial year, the more likely we will be to use this strategy. As for example, if we had this conversation in April, we could get four years of contributions in 3 short months with 1 year in April and then 3 in July.

Others

There is one holy grail of contributions which is much larger than this, but it’s not a non-concessional per se, the Lifetime CGT cap contributions of $1.65 million per person – super specific and super niche.

Or, the more common, downsizer contribution which is a tidy $300,000 and no age restrictions.

There’s also the carry forward concessional contributions, which given a taxable income can prove even more lucrative despite the fact the contributions are taxed at 15% depending on the persons circumstances.

Conclusion

So, the end result is as always, it depends. But, like always, because it depends, it might mean there’s a nugget of gold hiding in the law that provides a fantastic result for you!

Again, there’s plenty more info like this on our site, www.advisemetoday.com.au! So don’t be afraid to check it out or give us a call on 1300 978 737.

Thanks,

Andy

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Article by:

Andy Darroch

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