The super contribution rules in 2018 are very different to the 2017 year. With 30 June fast approaching, we want to ensure you are aware of the 2018 rules.
Concessional contributions (tax deductible)
The concessional contribution cap for the 2018 year has decreased from the 2017 year.
||Aged 50 years or over*
||75 and over
* If you are over 65 you must ensure you have passed a work test to be able to contribute to super. The work test is met by working 40 hours paid employment in a 30 day consecutive period during the year.
Personal Super Contributions
There are no longer any restrictions to employees making personal super contributions and claiming a tax deduction (concessional contributions). A tax loss cannot be created by a super contribution.
The contribution cap of $25,000 a year is for all concessional contributions (both your employer and personal contributions).
- Example: Jordan’s employer has contributed super on her behalf during the 2018 year of $9,500. She decides to make a personal concessional contribution of $10,000. Therefore she has used $19,500 of her concessional cap.
If you wish to make a personal superannuation contribution, check with your superannuation fund to confirm what contributions your employer has made, to ensure the cap is not breached.
Non-concessional contributions (after tax)
The 2018 non-concessional contribution cap is $100,000. This is reduced from $180,000 in 2017.
Super balance in excess of $1.6 million
If your total superannuation balance is $1.6 million or more at 30 June 2017, you are unable to make any non-concessional contributions – effectively your non-concessional cap is nil. Any non-concessional contributions will be treated as excess non-concessional contributions and have taxation implications.
Your total superannuation balance is the balance of all super accounts held.
Bring forward rule (general rules)
If you are under 65 years of age at any time in the 2018 financial year, you can bring forward 2 years of non-concessional contributions. This enables $300,000 of non-concessional contributions to be made in one year.
The bring forward rule is automatically triggered if you make a non-concessional contribution of more than $100,000 in one year. The total non-concessional contributions for the current year and next two years, have to be within the contribution cap of $300,000 in total.
- Example: Jack is 40 years old and makes a non-concessional contribution of $150,000 in the 2018 year. This means his total non-concessional contributions over the 2019 and 2020 year cannot exceed $150,000 (being $300,000 in total). If he contributed $120,000 in the 2019 year, he would only have $30,000 left of the cap to use in the 2020 year. In the 2021 year he would be back to having a $100,000 cap and potentially bring forward another 2 years again.
2018 Bring forward period
The available bring forward period is effected by your total superannuation balance at 30 June 2017.
|Total Super Balance on 30 June 2017
||Maximum Non-concessional contributions cap for the first year
||Bring forward period (including the current year)
|Less than $1.4 million
|$1.4 million to less than $1.5 million
|$1.5 million to less than $1.6 million
||No bring forward period
The remaining cap amount of a bring forward arrangement is reduced to nil for a financial year if your total superannuation balance is $1.6 million or more at the end of the previous financial year.
Bring forward transitional rule
Due to the reduction of the non-concessional contribution cap in 2018, if you triggered the bring forward rule in the 2016 or 2017 year and did not fully use the bring forward amount, there are transitional arrangements in relation to contribution cap you will have remaining.
The maximum bring forward amounts are:-
|Year bring forward period began
||Maximum bring forward amount in 2018
To work out the non-concessional cap for the 2018 year, subtract any non-concessional contributions you have made during the prior years of the bring forward period from the maximum bring forward amount.
- Example: Celeste made a non-concessional contribution of $200,000 in the 2016 year, so triggered the bring forward rule. She made a non-concessional contribution in the 2017 year of $110,000. Her non-concessional cap for the 2018 year is $150,000 ($460,000 – $200,000 – $110,000).
Due to the numerous factors affecting the non-concessional contribution cap for the 2018 year under the transitional arrangements, you should contact us to assist you with working out your cap.
Other considerations – Increase in the Threshold for Div 293 Tax
From 1 July 2017, if your adjusted taxable income exceeds $250,000, your concessional contributions are taxed at 30% instead of 15%. The additional tax is assessed in your personal tax return.
Prior to 1 July 2017, the threshold was $300,000.
If you would like to discuss any of the above rules, please contact your Bentleys advisor.