The Bring-forward rule is a provision that allows Members to make non-concessional contributions (after-tax contributions) amounting to more than the contributions cap of $110,000 over a three-year period from 1 July 2021. From 1 July 2017 to 30 June 2021, the non-concessional contributions cap was $100,000.
You cannot make any non-concessional contributions if your total super balance on 30 June of the prior year is greater than or equal to the general transfer balance cap ($1.6 million for FY2017–21; $1.7 million for FY 2022-23; $1.9 million from FY2024).
Members can make up to 3 years’ worth of non-concessional contributions in the First Year by bringing forward the caps of the next 2 years. Previously, this rule was only applicable to those under the age of 67 or 65, please click here for more info. From 1 July 2022, this rule will now apply to those under the age of 75.
If you are under 75 years old and you make excess non-contributions, the bring-forward rule will automatically be triggered and bring forward the next two years’ non-concessional contributions – but certain conditions apply. This means:
When the non-concessional contributions made to your SMSF exceed $110,000, the bring-forward rule is automatically triggered. Once this happens, the normal non-concessional contributions cap does not apply to the next two years. However, the total non-concessional contributions for the three-year period cannot exceed $330,000.
If you make any more non-concessional (after-tax) contributions to your SMSF, you will have to pay excess non-concessional contributions tax. You will receive a letter from the ATO in regards to the excess non-concessional contributions. Please click on the button below to see an example of the ATO letter:
For more info on how much you can contribute to your SMSF and the applicable interest rates charged by the Tax Office on excess contributions, please see the ATO website by clicking here.
From 1 July 2022, the bring-forward rule cannot be utilised by those who are aged 75 or over. The maximum amount an individual aged over 75 can contribute is $110,000 per annum. In addition, in order to make contributions to your SMSF, you are required to satisfy the work test. Excess non-concessional contributions should be withdrawn from the SMSF; otherwise the excess amount may be taxed at you marginal tax rate.
The following points are aimed at helping Trustees who are still confused about how the bring-forward provisions work and how to use it to their advantage.
The bring-forward applies to each Member of the SMSF. Each Member can potentially contribute up to $330,000 (FY 2022/2023) and onwards when the bring-forward rule is triggered. However, the bring-forward rule only applies to those under 75 years of age.
The bring-forward rule only applies to future years’ contributions. If you fail to utilise your non-concessional cap for one or more years, then the cap for those years can’t be carried forward.
The bring-forward provision allows you to maximise your total non-concessional contributions for a total of $330,000 (FY 2022/2023) in Year 1, rather than over a three-year period. However, in order to gain maximum benefit from it, it is important that you understand how the rule works.
If you want to contribute more after triggering the maximum cap of 3 year rule, you would need to wait until Year 4, when the bring-forward is reset.
The contributions you make for the first home saver super scheme will be allocated to a separate account which is distinguished from the guaranteed employer contributions. Our accounting system can accommodate this new change and a separate single line item will be displayed in the SMSF Financial Statements showing the first home super saver contributions.
For more information, please see the ATO page here.