Following on from our Super Update last week, the Treasurer has provided further clarification regarding how the transitional rules will work for individuals who trigger the $540k cap before 1 July 2017.
Individuals have one last opportunity this year to use the higher personal after tax contribution limits of $180,000 per year. Where the taxpayer are in a position to take advantage of this, they could contribute up to $540,000 before 30 June 2017. Post July 2017, the bring-forward cap will be recalculated to reduce the remaining period’s annual caps from $180k per year to $100k per year.
Take an example: If an individual was to trigger the $540k bring-forward cap in the current year by making a $250k on after tax contribution to their superannuation fund, they would only be able to contribute a further $130k over the next 2 income years. The total over the 3 years of $380k represents the current year’s annual cap of $180k, plus the $100k annual cap for the next 2 years under the new rules.
Therefore, if you are in a position to consider utilising the $540k bring-forward cap in the current year to be able to contribute up to an extra $160k in non-concessional contributions. Prior to implementing the above strategy, please contact us to ensure you implement correctly.