Private ruling: Non-concessional contributions cap - bring forward limit
Published: May 2012
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can your client make a contribution up to the bring forward residual amount in the 2011-12 income year without exceeding the non-concessional contributions cap? Advice/Answers 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). | Superannuation Industry (Supervision) Act 1993 | Superannuation Industry (Supervision) Regulations 1994

Reasons for decision: Detailed Reasoning - Summary of decision: Your client can make a contribution in the 2011-12 income year without exceeding the non-concessional contributions cap. | 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 2011-12 income year is $150,000. | Detailed Reasoning - 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 $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. | Detailed Reasoning - 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, in the 2010-11 (the first year) income year your client was eligible for and triggered the bring-forward provisions. This means two future years' entitlements up to the bring forward residual amount can be made in the 2012-13 and 2013-14 income years without breaching the non-concessional contributions caps for those income years. Therefore, your client can make a non-concessional contribution up to the bring forward residual amount to the Fund in the 2011-12 income year. Further, the Fund will be able to accept the contribution as your client meets the work test.

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 client is a member of the Fund, a self managed superannuation fund. | In the 2010-11 income year, prior to turning age 65, your client made a contribution to the Fund invoking the $450,000 non-concessional bring forward contribution limit. | Your client is still in receipt of employment income and satisfies the work test. | Your client intends to make a further non-concessional contribution up to the bring forward residual amount to the Fund in the 2011-12 income year.