Private ruling: Non-concessional contributions - bring-forward provisions
Published: January 2013

Ruling: Q1: Will the 'bring-forward' provision under subsection 295-85(4) of the Income Tax Assessment Act 1997 be triggered where a contribution in excess of the non-concessional cap is made in the relevant income year? Answer/Advice Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 292-80. | Income Tax Assessment Act 1997 Subsection 292-85(2). | Income Tax Assessment Act 1997 Subsection 292-85(3). | Income Tax Assessment Act 1997 Paragraph 292-85(3)(a). | Income Tax Assessment Act 1997 Paragraph 292-85(3)(b). | Income Tax Assessment Act 1997 Paragraph 292-85(3)(c). | Income Tax Assessment Act 1997 Subsection 292-85(4).

Reasons for decision: Detailed Reasoning - Summary of decision: During the relevant income year, you are under 65 years of age, have not already triggered the bring-forward provision and intend to make non-concessional contributions in excess of $150,000 but not more than $450,000. Therefore, you are able to trigger the bring-forward provision by contributing an amount in excess of $150,000 and up to $450,000 in the relevant income year. | Detailed Reasoning - Non-concessional contributions cap: Non-concessional contributions made to a complying superannuation fund will be subject to an annual cap (subsection 292-85(2) of the Income Tax Assessment Act 1997 (ITAA 1997)). For a person who is 50 years of age or more their non-concessional contributions cap for the relevant income year is $150,000. Non-concessional contributions include: · personal contributions for which an income tax deduction is not claimed; · contributions a person's spouse makes to their superannuation fund account; and · transfers from foreign superannuation funds (excluding amounts included in the fund's assessable income). Some contributions are specifically excluded from being non-concessional contributions. These include: · a Government co-contribution; · a contribution arising from a structured settlement or an order for personal injury; · a contribution relating to some capital gains tax (CGT) small business concessions to the extent that it does not exceed the CGT cap amount ($1,000,000 indexed annually) when it is made; and · a roll-over superannuation benefit. A taxpayer will be taxed on non-concessional contributions over the cap at the rate of 46.5% (section 292-80 of the ITAA 1997). As a concession, to accommodate larger contributions, taxpayers under age 65 in an income year are able to bring-forward future entitlements to two years worth of non-concessional contributions. | Detailed Reasoning - The Bring-Forward Provisions: For a person who is 50 years of age or more their transitional concessional contribution cap for the relevant income year is $50,000 and their non-concessional contributions cap is $150,000. However, subsections 292-85(3) and (4) of the ITAA 1997 ('the bring-forward provisions') provide that the non-concessional contributions cap is calculated differently if certain conditions are satisfied. Subsection 292-85(3) of the ITAA 1997 states: However, subsection (4) applies instead of subsection (2) in determining your non-concessional contributions cap for a financial year (the first year ) if: · your non-concessional contributions for the first year exceed the amount mentioned in subsection (2) for that year; and · you are under 65 years at any time in the first year; and · a previous operation of subsection (4) does not determine your non-concessional contributions cap for the first year. Therefore, a person who is under 65 years of age at any time during the income year who makes non-concessional contributions that exceed the non-concessional contributions cap specified under subsection 292-85(2) of the ITAA 1997, would trigger the bring-forward provisions and their non-concessional cap would be calculated in accordance with subsection 292-85(4) of the ITAA 1997. In this case, you have made non-concessional superannuation contributions to a Retirement Savings Account (RSA) with a RSA provider in the 20YY and 20ZZ income years. Both non-concessional contributions were less than the non-concessional contributions caps. In the 20YY income year a contribution not exceeding your non-concessional cap of $150,000 has been made. In this instance, you have not triggered the bring-forward provisions in the 20YY income year. You made a non-concessional contribution of $100,000 to your RSA in the 1st quarter of the relevant income year. This contribution does not exceed your non-concessional cap therefore you have not yet triggered the bring-forward provision in the relevant income year. In order to trigger the bring-forward provision in the relevant income year you need to contribute a further non-concessional contribution (an amount in excess of the non-concessional contribution cap) to your RSA prior to 30 June 20ZZ. In this scenario two future years' entitlements up to the bring-forward residual amount can be made in the two subsequent income years without exceeding the non-concessional contributions caps for those income years. Alternatively, you can contribute a further contribution but not more than $450,000 in the relevant income year without exceeding your non-concessional contributions cap. In this case, you will be unable to make further non-concessional contribution for the two subsequent income years without exceeding your non-concessional contribution caps. Please note, for income tax and superannuation purposes, an RSA is treated in a similar manner to traditional superannuation products. It means, RSA providers and payments from RSAs are subject to equivalent taxation treatment to that applying to superannuation funds and superannuation benefits.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns. | Relevant facts: Your advice is based on the following facts. | · You are retired from employment. | · You have an interest in an accumulation fund with a complying superannuation fund. | · You and your spouse sold a property in 20XX and in the YY income year, you made a non-concessional contribution less than the non-concessional contributions cap to a Retirement Savings Account (RSA) with a RSA provider. | · During the 1 st quarter of the relevant income year, you made a non-concessional contribution to the RSA. | · You intend to make further non-concessional contributions to a superannuation fund in the relevant income year to trigger the bring-forward provisions without exceeding your non-concessional cap.