Private ruling: Non-concessional contributions
Published: January 2014
Ruling period: Year ending 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Can you make personal contributions in the 2013-14 income year without exceeding the non-concessional contributions cap? Advice/Answers Yes

Relevant facts and circumstances: You are under 65 years of age. You intend to make a non-concessional contribution to the Fund in the 2013-14 income year. Assumptions None.

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 Further issues for you to consider | Not applicable. | Anti-avoidance rules | Not applicable. | Summary of decision | In the 2013-14 income year you are able to make a contribution of $X in the 2013-14 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 2013-14 income year is $150,000. Non-concessional contributions include: | Ÿ personal contributions for which an income tax deduction is not claimed; | Ÿ contributions a person's spouse makes to their superannuation fund account; and | Ÿ 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: | Ÿ a Government co-contribution; | Ÿ a contribution arising from a structured settlement or an order for personal injury; | Ÿ 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 | Ÿ 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). | In this case, you are able to make a contribution of $X in the 2013-14 income year without exceeding the non-concessional contributions cap. | Please note, 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. | The Bring Forward Provisions | For a person who is 50 years of age or more their transitional concessional contribution cap for the 2013-14 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: | (a) your non-concessional contributions for the first year exceed the amount mentioned in subsection (2) for that year; and | (b) you are under 65 years at any time in the first year; and | (c) 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 who makes non-concessional contributions during the income year 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.