Non-Concessional Contribution (NCC)

A Non-Concessional Contribution is after-tax money that Trustees contribute into their SMSF’s.

From 1 July 2017, the Non-Concessional Contribution cap will be reduced from $180,000 to $100,000 per year. However, from 1 July 2021, the Non-Concessional Contribution cap will increase from $100,000 to $110,000.

The three-year bring forward rule will, therefore, increase from $300,000 (3 times $100,000) to $330,000 (3 times $110,000). For a better understanding of how the bring-forward rule works, please see the example below:

Sam, who is 40, has a superannuation balance of $200,000 and makes a Non-Concessional Contribution of $300,000 in the 2021 financial year. This automatically triggers the three-year bring forward rule. Depending on the year that the Non-Concessional Contribution is made, transitional arrangements will apply differently to the remaining Non-Concessional Contribution available.

Income Year when the Non-Concessional Contribution was made Annual Cap on Non-Concessional Contribution
2020-2021 100,000
2021-2022 110,000
2022-2023 110,000
Total Non-Concessional Contribution cap for Sam 320,000
Less: Non-Concessional Contribution from Sam in 2020-2021 (300,000)
Remaining Non-Concessional Contribution amount for Sam 20,000

 

The available Non-Concessional Contribution cap for Sam is $320,000 for 2021, 2022 and 2023 financial years. This means that after making the $300,000 Non-Concessional Contribution in the 2021 financial year, Sam will only be able to make Non-Concessional Contribution of $20,000 in the next two financial years without breaching the cap.

Other Non-Concessional Contribution points to note

  • From 1 July 2021, the age limit for the bring-forward rule to apply has increased to below the age of 67
  • Any person who holds a superannuation balance of more than $1.7 million cannot make any further Non-Concessional Contribution as of 1 July 2021.

For more information on other forms of Contributions in general, please see here.

 

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