Superannuation members should seek to maximise their super contributions to utilise any unused parts of their current cap by the end of the financial year, according to Townsends Business and Corporate Lawyers.
The law firm’s solicitor, Julie Hartley, said under new rules stipulated in the 2016 Federal Budget, super members would no longer be able to automatically bring forward three years’ worth of contributions in one year.
The maximum amount would now be either two or three times the annual cap, depending on the member’s total super balance at 30 June immediately before the relevant financial year (i.e. the year during which the bring forward is to be triggered).
Hartley also noted that along with the maximum annual limit for using the bring-forward cap being decreased from $180,000 to $100,000, members must also meet other criteria, including that the amount that is being contributed must surpass the annual non-concessional cap, and the member’s total superannuation balance at 30 June of the previous financial year must be under the general transfer balance cap ($1.6 million).
“If the member does not fully use their bring-forward cap in year one (being the year during which the bring-forward is triggered), their cap for year two will be the unused portion of their cap from year one, provided their total superannuation balance as at 30 June before the start of year two is below the general transfer balance cap,” Hartley said.
“A similar approach will be adopted in year three. In that year, the cap for year three will be the unused portion of the bring-forward cap from year two.
“What if a member’s superannuation balance is over the general transfer balance cap at the beginning of year two? If their balance is over the general transfer balance cap, then the cap for year two is nil.”
If a member was eligible to contribute again in year three due to their super balance dipping below the cap for instance, then the cap available for year three would be the unused portion of their cap from year one.