Tim Sanderson, senior technical manager for Colonial First State, said restricting non-concessional contributions this year to $110,000 or less will allow clients to make non-concessional contributions up to a maximum of $360,000 on or after the 1 July 2024 to take full advantage of this increased cap.
“Advisers need to be aware that the maximum non-concessional contribution a person can make under the bring-forward rule will increase potentially to a maximum of $360,000 from 1 July 2024, which is an extra $30,000. However, there’s a trap as the increase won’t necessarily apply to everyone, at least not from the 1 July,” he said.
“It won’t apply to members who’ve already triggered the bring-forward rule and are still within their bring-forward period on 1 July and for the 2024-25 financial year, as these members have already effectively locked in their non-concessional cap for the duration of their bring-forward period.”
For example, a person who made a $330,000 non-concessional contribution under the bring-forward rule last year, will not be able to make any additional non-concessional contributions until after their bring-forward period expires at the end of 30 June 2025, Sanderson added.
“Advisers also need to be conscious of a client’s age and their total super balance. For example, if they’re going to be turning 75 before 30 June, and will be eligible to contribute next year, they may be better off making a non-concessional contribution of up to $330,000 this year,” he said.
“Also, if it looks like a client’s total super balance may be $1.9 million or higher on 30 June, then they may be better off making a non-concessional contribution this year as their cap may be nil next year.”
Additionally, Sanderson said it is important to be aware of the reduced bring-forward rule thresholds this year.
“Without laying out all the details about the non-concessional cap and bring-forward rule, the three thresholds that relate to that rule at the moment are $1.68 million, $1.79 million and $1.9 million, and that top threshold is equal to the general transfer balance cap, so that stays the same next year,” he said.
“Those lower two thresholds are then the general cap, less either one times or two times the standard non-concessional cap, but with the total transfer balance cap remaining fixed at $1.9 million, and the non-concessional cap increasing to $120,000, it flows on that those two lower thresholds will drop to $1.66 million and $1.78 million respectively, so advisers are really going to need to be mindful of these reduced thresholds from 1 July for clients with large total super balances.”
