Private ruling: Non-concessional contributions and the bring-forward provisions.
Published: July 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: 1. Can you make further personal contributions in the 2012-13 and 2013-14 income years without exceeding the non-concessional contributions cap? 2. Can you make personal contributions of up to $450,000 between 1 July 2014 and before you turn age 65 without exceeding the non-concessional contributions cap? 3. Do all the personal contributions of up to $450,000 have to be made before you reach age 65 if you will not satisfy the work test for gainful employment after age 65? | A1: 1. Yes. 2. Yes. 3. Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 292-80. | Income Tax Assessment Act 1997 Section 292-85. | Income Tax Assessment Act 1997 Subsection 292-85(2). | Income Tax Assessment Act 1997 Paragraph 292-85(2)(c). | Income Tax Assessment Act 1997 Subsection 292-85(3). | Income Tax Assessment Act 1997 Section 292-410. | Superannuation (Excess Non-concessional Contributions Tax) Act 2007 Section 4. | Superannuation (Excess Non-concessional Contributions Tax) Act 2007 Section 5. | Superannuation Industry (Supervision) Regulations 1994 Subregulation 1.03(1). | Superannuation Industry (Supervision) Regulations 1994 Subregulation 7.01(3).

Reasons for decision: Summary: As you have made non-concessional contributions in excess of the non-concessional contributions cap to the Fund in the 2011-12 income year, you have triggered the bring-forward provision. Consequently, you can contribute a further amount up to the remaining balance of the bring forward limit in the 2012-13 and 2013-14 income years without breaching non-concessional contributions cap. In the 2014-15 income year, you will be able to contribute a further $450,000 (or greater amount depending on indexation) utilising the bring-forward provision, without breaching the non-concessional contributions cap provided the contribution is, or contributions are, made prior to your 65 th birthday. To make further contributions on or after your 65 th birthday, where you have not contributed up to the bring forward limit, you will need to satisfy the 'work test'. | 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)). The non-concessional cap, for the 2009-10 income year, is six times the concessional contributions cap for the income year. This means that, for the 2011-12 and 2012-13 income years, the non-concessional contributions cap is $150,000. Non-concessional contributions include (among others): · personal contributions for which an income tax deduction is not claimed; and · contributions a person's spouse makes to their superannuation fund account. A taxpayer will have a liability to pay excess non-concessional contributions tax at the rate of 46.5% if they have excess non-concessional contributions for an income year (subsection 292-80 of the ITAA 1997 and sections 4 and 5 of the Superannuation (Excess Non-concessional Contributions Tax) Act 2007 ). The taxpayer will be required to ask their superannuation fund to release an amount that is equal to the tax liability (section 292-410 of the ITAA 1997). | Detailed Reasoning - The bring-forward provisions: As a concession, to accommodate larger contributions, persons under age 65 in an income year are able to 'bring forward' future entitlements to two years worth of non-concessional contributions. This means a person under age 65 will be able to contribute non-concessional contributions totalling $450,000 over three income years without exceeding their non-concessional contributions cap (subsections 292-85(3) and (4) of the ITAA 1997). The bring-forward will be triggered automatically when contributions in excess of the annual non-concessional contributions cap are made in an income year by a person who is under age 65 at any time in the year where a bring-forward has not already commenced (subsection 292-85(3) of the ITAA 1997). Where a bring-forward has been triggered, the two future years' entitlements are not indexed. Non-concessional contributions made in the 2011-12 income year and proposed to be made in the 2012-13 and 2013-14 income years During the 2011-12 income year, you made a non-concessional contribution to the Fund which resulted in the contribution exceeding the non-concessional contributions cap of $150,000 for that income year. As you were under age 65 for the entire income year and the bring-forward under subsection 292-85(3) of the ITAA 1997 had not already commenced, this contribution automatically triggered the bring-forward. Consequently, as you are still under age 65, you are able to contribute up to a further contribution in the 2012-13 and 2013-14 income years up to the bring forward limit the without breaching the non-concessional contributions cap. As already noted the two future years' entitlements are not subject to indexation. Proposed non-concessional contributions in the 2014-15 income year You also propose to make a further personal contribution of up to $450,000 (utilising the bring forward provision) to the Fund at some time between 1 July 2014 and before you turn age 65. As already noted earlier, the non-concessional contributions cap is the amount that is six times the concessional contributions cap for the income year concerned (paragraph 292-85(2)(c) of the ITAA 1997). Both the concessional contributions cap and the non-concessional contributions cap for the 2014-15 income year have yet to be determined through indexation, which is in line with average weekly ordinary time earnings (AWOTE), in increments of $5,000. The new indexed amounts of these annual caps for a income year are generally made available each February. Consequently, it is possible that the upper amount you may be able to contribute to the Fund between 1 July 2014 and before you turn age 65 without exceeding the non-concessional contributions cap, utilising the bring forward provision, could be greater than $450,000. Provided you make contributions before you turn age 65, you can contribute up to $450,000 (subject to any indexation increase just mentioned) utilising the bring forward provision. If you do not make the contributions before you turn age 65 you will need to have satisfied the 'work test' to make any contributions on or after this date. | Detailed Reasoning - 'Work test': Under subregulation 7.01(3) of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) there are no conditions required to be met in order for a superannuation fund to accept contributions from a member who is under age 65. However, where the member is between age 65 and age 70, they must be gainfully employed on at least a part-time basis during the income year in order for a superannuation fund to accept contributions from that member. To meet this requirement, the member must be gainfully employed for a least 40 hours in a period of not more than 30 consecutive days in that income year. This is generally referred to as the 'work test'. 'Gainfully employed' means employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment (subregulation 1.03(1) of the SIS Regulations). The concept of 'gain or reward' envisages receipt of remuneration such as salary or wages, business income, bonuses, commissions, fees or gratuities, in return for personal exertion. It does not encompass a person who is only receiving passive income (eg trust distributions, dividends) or a person who does 'volunteer' work.

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 are currently under 65 years of age. | During the 2011-12 income year, you made a voluntary personal non-concessional contribution to the Fund that exceeded the non-concessional contributions cap for that income year but was below the maximum bring forward amount of $450,000. You propose to make further personal contributions of up to the remaining balance of the bring forward amount to the Fund at any time up to 30 June 2014. | You will turn 65 years of age during the 2014-15 income year. You also propose to make a further personal contribution of up to $450,000 to the Fund at some time between 1 July 2014 and before you reach age 65.