Non-concessional contributions are subject to the nonconcessional contributions cap and is set at 4 times the CC Cap ($25,000 from 1 July 2017) for those with superannuation balances of up to $1.6M. Therefore from 1 July 2017 the NCC Cap is $100,000. As the CC Cap is indexed in increments of $2,500 the NCC cap increases in increments of $10,000. For those with superannuation balances in excess of $1.6M the NCC Cap reduces to nil.
Since no tax deductions have been claimed on these contributions, the super fund does not deduct tax on receipt of non-concessional contributions within the cap.
If you are under age 65 on 1 July of the financial year, you are able to bring forward up to two years of non-concessional contributions, effectively contributing three years of contributions in the one financial year. This is referred to as the ‘Bring Forward’ rule.
This means that if a person exceeds the cap in year one, they can use some or all of the caps for years two and three before being subject to any penalty tax. If you use the whole consolidated three year cap in year one, you cannot make any more non-concessional contributions in the next two subsequent financial years.
Prior to 1 July 2017 the cap for NCCs was 6 times the general CC cap ($180,000 in 2015/16 and 2016/17) and the ‘bring forward’ rule was also only available for people under 65. Transitional rules apply to those who have triggered the ‘Bring forward’ rule but had fully not utilised the cap in the 2 financial years prior to 2017/18 year.
The remaining available NCC Cap is recalculated on 1 July each year so members do not exceed the ‘Bring Forward’ rule amounts or the $1.6M available total superannuation balance cap.