Excerpt from ATO – Superannuation contribution cap changes
Find out if the superannuation contribution cap changes affect you. This information is relevant to you if you:
receive contributions from your employer into super
salary sacrifice into super
make personal contributions to their super and claim a tax deduction for the contributions.
Exceeding the Concessional Contributions Cap
You may exceed concessional contributions cap, even though the contribution behaviour remains the same. You may exceed the cap if:
concessional contributions were more than $25,000 in the 2017–18 or later financial years. If so, they must lodge a tax return for the year they exceeded the cap
they are a member of a constitutionally protected fund. Concessional contributions made to these funds now count towards the concessional contributions cap
they are a member of a defined benefit fund which has unfunded contributions each financial year. These contributions now count towards their concessional cap.
New Non-concessional Contribution and Bring-forward Arrangements
The non-concessional contributions cap and bring-forward arrangements are relevant to you if:
make or plan to make after-tax contributions into their super
were under 65 years old at any time in the first year the bring-forward is triggered
made a lump sum non-concessional contribution that triggered a bring-forward arrangement in the 2015–16 or 2016–17 financial year, prior to the introduction of the $1.6 million limit on 30 June 2017
had a total super balance of $1.4 million or more from 30 June 2017.
When Your Non-concessional Contribution Cap is Zero
If your client's total super balance (TSB) on 30 June of a financial year is $1.6 million or more, their non-concessional cap for the following financial year is zero.
If you’re currently in a bring-forward arrangement and the TSB is $1.6 million or more on 30 June prior to either the second or third year of the bring-forward, the remaining bring-forward cap will be nil for the respective financial year.
Mandated Non-concessional Contributions
paying the excess contributions tax
If your TSB is $1.6 million or more at 30 June in the previous financial year and you are committed to mandated non-concessional contributions within a defined benefit fund, they will exceed the non-concessional contributions cap. You will receive an excess non-concessional contributions (ENCC) determination.
If you are unable to release the amount in the ENCC determination from the super fund, you must select Option 2 in the ENCC election, and you will receive an excess contribution tax (ECT) assessment.
You will need to pay the resulting ECT liability from your own sources. You will not be able to release amounts from super to pay this.
A Change in Remaining Bring-forward Cap
Your remaining bring-forward cap will change because the annual contribution cap has reduced from $180,000 to $100,000 for the 2017–18 and future years.
Transitional arrangements will apply if you:
triggered the bring-forward arrangement in 2015–16 or 2016–17
has not completely used their bring-forward cap amount before 1 July 2017.
The maximum amount of bring-forward available depends on the year that you triggered the bring-forward arrangement. It will reflect the reduced annual non-concessional contributions cap.