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

Top answer provided by:

Matthew Rea

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Great question Seamus!

To answer your question let’s start with what ‘non-concessional contributions’ are. A non-concessional superannuation contribution is a personal super contribution that you have not claimed as a tax deduction. Since you have already paid tax (personal income tax) on these funds, they will form a part of your tax-free balance once they hit your superannuation account.

The one-word answer to your question might be ‘$110,000’ which is the non-concessional super contribution cap for one financial year, but that doesn’t tell the full story. Depending on your circumstances you might have access to strategies that increase the amount you can make as a non-concessional contribution. Some examples include:

1. The ‘bring-forward rule’ allows you to use three years’ worth of non-concessional caps at once allowing for a maximum of $330,000 as a one-off contribution. In practice, this would use the current financial year’s non-concessional cap, plus the next two financial years. Unfortunately, we can’t use past non-concessional caps under the bring forward rule (only future years).
2. If you are age 60 or over (previously 65) and are selling your home, you may be eligible to make a ‘downsizer contribution’. This allows for a further $300,000 each, on top of your regular non-concessional caps. You must make the contribution within 90 days of receiving the sale proceeds, and there are additional eligibility requirements (like owning the home for 10 consecutive years) so make sure you seek advice and have a plan in place before the sale.

Benefits of non-concessional contributions:

1. They are a great way to quickly increase your super balance.
2. The investment earnings on your tax-free balance are taxed at 0%, rather than the regular 10%-15% inside superannuation and up to 47% outside of superannuation!
3. Your eventual superannuation beneficiaries will not need to pay additional tax on your ‘tax-free’ balance (since you have already paid income tax on the funds). This is not always the case for your ‘taxed’ balance.
4. It may enable you to claim a government co-contribution up to $500 pa if your income is below certain limits.
5. It may make sense for you to make a non-concessional contribution to your spouse and receive a tax offset for doing so. This is called a ‘spouse contribution’ and is counted as a non-concessional contribution.

Things to be aware of:

1. A lot of the above strategies are dependent on your income or your ‘total super balance’. Therefore, it is important to plan ahead if you intend on using these strategies in the future and ideally talk to a financial adviser before making any decisions.
2. You must be under the age of 75 to make non-concessional contributions (which was recently increased from age 65).
3. If you are a small business owner, you may have access to additional non-concessional contribution caps upon the sale of your business.
4. Remember that your spouse may have access to these same strategies, and it may make more sense in their name than your own.
5. Remember that money inside superannuation is locked away until you meet a ‘condition of release’ (like retiring after age 60).

To sum up, depending on your situation, the answer to your question is somewhere between $110,000-$630,000 per individual or up to $1,260,000 for a couple. The complexity of such a simple question is probably why I have a job!

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Article by:

Matt Rea

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