The super reform measures that commenced on 1 July 2017 introduced additional restrictions on those looking to make non-concessional contributions.
The new "total superannuation balance" rules reduce the ability for people with super benefits exceeding $1.6M from making further non-concessional contributions. A client's total superannuation balance includes all accumulation balances held in all super funds (including transition to retirement pensions that are not in "retirement phase"), all superannuation income streams that are in retirement phase and any roll-overs in progress that are not included in the above.
If your total superannuation balance at the end of 30 June in the previous financial year is less than the general transfer balance cap, you will be eligible for a non-concessional contributions cap; being $100,000 in 2017–18. Some people may also be entitled to a two or three-year bring-forward period for non-concessional contributions cap based on their total superannuation balance.
If your total superannuation balance at the end of 30 June in the previous financial year is NOT less than the general transfer balance cap, your non-concessional contribution cap for the year is $Nil. That is, any non-concessional contribution that is made will be an excess non-concessional contribution. For 2018FY contributions, we will need to review total super balances as at 30 June 2017.
There are additional rules that impose a "transitional non-concessional contribution cap" for people who triggered the bring forward rule for non-concessional contribution rules in the 2016 or 2017 financial years. These additional transitional rules are only relevant if you did make non-concessional contributions in those years that resulted in the bring forward rules being triggered and where you DID NOT make use of the full $540,000 that was available before 30 June 2017.
If you have previously received advice around planned contribution strategies that included contributions to be made post 30 June 2017, it is imperative that you revisit this advice with Collins Hume to make sure that any recommendations and advice is still valid to avoid excess contributions and tax penalties. If you act on prior advice, it could result in excess contributions and tax penalties.
General Advice Warning: This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial adviser before making any investment decisions. Collins Hume is a Corporate Authorised Representative No 1243440 of GPS Wealth Ltd | AFSL 254 544 | Australian Credit Licence 254544 | ABN 17 005 482 726.