Private ruling: Non-concessional contributions cap - bring forward provisions
Published: June 2012
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Can you make personal contributions of up to $450,000 in the 2012-13 income year without exceeding the non-concessional contributions cap? | A1: Yes. | Q2: Are the contributions required to be made before you turn 65 years of age in the income year in which they are proposed to be made? | A2: No.


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). | Superannuation Industry (Supervision) Act 1993 | Superannuation Industry (Supervision) Regulations 1994

Reasons for decision: Detailed Reasoning - Summary of decision: You will be under 65 years of age during part of the 2012-13 income year and you intend to make non-concessional contributions. Therefore, provided that you have not already triggered the bring-forward provision you will be able to trigger the bring-forward provisions by contributing an amount in excess of $150,000 and up to $450,000 in the 2012-13 income year. Amounts you roll-over directly from another complying superannuation fund do not count towards your non-concessional contributions cap. Amounts withdrawn from superannuation and then re-contributed to a complying fund are counted towards your contributions caps. The self managed superannuation fund will be able to accept contributions that are made in respect of you as you will be gainfully employed. | Detailed Reasoning - Non-concessional contributions cap: Non-concessional contributions made to a complying superannuation fund are 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 2012-13 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 2011-12 income year is $25,000, 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 intend to make non-concessional contributions during the 2012-13 income year (the first year) and you will be under 65 years of age for part of that year. Therefore, provided that you have not already triggered the bring forward provision in either of the 2010-11 or 2011-12 income years, you will be eligible to trigger the bring-forward provisions in the 2012-13 income year when you make a non-concessional contribution in excess of $150,000 at any time during this income year, even after you turn 65. Upon triggering the bring forward in the 2012-13 income year, you will be able to make non-concessional contributions in the 2012-13, 2013-14 and 2014-15 income years totalling no more than $450,000 without breaching your non-concessional cap. Please note that amounts you roll-over directly from another complying superannuation fund do not count towards either your concessional or non-concessional contributions cap. However, amounts withdrawn from superannuation and then re-contributed to a complying fund are counted towards your contributions caps. | Detailed Reasoning - Conditions of Accepting Contributions: Whether a regulated superannuation fund is able to accept contributions is determined under the Superannuation Industry (Supervision) Act 1993 (SISA) and the Superannuation Industry (Supervision) Regulations 1994 (SISR). If a member is not under age 65 but is under age 70, the fund may accept member contributions in respect of the member if the member has been gainfully employed on at least a part time basis during the financial year in which the contributions are made. This is known as the 'work test'. Under subregulation 1.03(1) of the SISR 'gainfully employed' means: · employed or self employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment. The term 'part-time' is defined under subregulation 7.01(3) of the SISR as follows: · In this Part, a person is gainfully employed on a part-time basis during a financial year if the person was gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in that financial year. Therefore, a person who is between age 65 and 70, and is engaged in paid employment, for at least 40 hours in a period of 30 consecutive days in that income year, will meet the work test. This means that their superannuation fund can accept the contributions made by them after reaching age 65 years of age. The self managed superannuation fund will be able to accept the contribution under SISA and SISR for the 2012-13 income year as you will be gainfully employed.

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: You will turn 65 years of age in the 2012-13 income year. | You intend to make a contribution to a self managed superannuation fund in the 2012-13 income year after you turn age 65. | In the 2012-13 income year you will be gainfully employed. | You intend to trigger the bring forward rules by making a contribution with: | · the proceeds from the sale of a property | · a rollover from a retail fund, and | · an in-specie contribution of listed shares.