Non-Concessional Contributions Cap

Budget measure

Our understanding

An annual cap of $100,000 will replace the current $180,000 cap from 1 July 2017. Additionally, non-concessional contributions may only be paid where the members account balance* is less than $1.6 million. If a member exceeds their non-concessional cap and/or has an account balance of more than $1.6 million, they will also be ineligible to receive Government Co-contributions.

Individuals with a defined benefit who have reached the cap, or have a balance of more than $1.6 million, may still choose (or be required) to pay non-concessional contributions, but will have zero cap space. The contributions will become excess contributions and be subject to Excess Contributions Tax (ECT) if they cannot be removed. Excess contributions can be removed from accumulated amounts in the CSS (such as transfer amounts), but not defined benefit components. Alternatively, the excess amount may be removed from a separate accumulation account you hold elsewhere.

The 3 year bring-forward rule can still be utilised, but will be based on the lower cap of $100,000 from 1 July 2017. If the bring-forward rule has been triggered in the 2015-16 or 2016-17 financial year, a proportional calculation will apply:

If bring-forward rule is triggered in 2015-16 financial year:
2015-162016-172017-18Total Cap
$180,000 $180,000 $100,000 $460,000
If bring-forward rule is triggered in 2016-17 financial year:
2016-172017-18^2018-19^Total Cap
^ assuming non-concessional cap remains at $100,000 for later financial years, however cap will continue to be subject to indexation.
$180,000 $100,000 $100,000 $380,000
If bring-forward rule is triggered from 2017-18 financial year onwards:
2017-182018-19^2019-20^Total Cap
^ assuming non-concessional cap remains at $100,000 for later financial years, however cap will continue to be subject to indexation.
$100,000 $100,000 $100,000 $300,000

*A members ‘account balance’ will include their scheme equity (the ‘accumulation phase value’), the balance of their Transfer Balance Account, as well as any transferred amounts that have not been counted elsewhere. Due to the complex nature of defined benefit schemes, clarity is still being sought as to how the scheme equity will be calculated for the purposes of this measure.

Given the complexities of these new measures, a fact sheet will be uploaded to the CSS website in the near future to help you better understand these changes.