You may have heard that the annual cap on non-concessional contributions (NCCs) has increased for 2024–2025. This is great news for superannuation members who want to maximise their retirement savings. But do you know what this means for the three-year “bring-forward” arrangement? There are rules governing your eligibility, and it’s important to understand how the relevant thresholds have changed – including a small trap that some may not have expected! Now is a good time to re-examine the rules.
NCCs are your own after-tax contributions, meaning they’re distinct and separate from concessional contributions such as compulsory employer contributions made for you, additional salary sacrifice contributions, and personal contributions you’ve made for which you claim a deduction. From 1 July 2024, the annual cap on NCCs increased from $110,000 to $120,000 due to indexation.
This increase means that the maximum amount that can be contributed under a “bring-forward” arrangement has also increased. A “bring-forward” arrangement allows eligible members to contribute up to three years’ worth of NCCs in a shorter timeframe. The maximum amount is now $360,000 (being 3 × $120,000), up from $330,000. Therefore, eligible members could contribute up to $360,000 all at once, or as multiple contributions, as long as the total amount does not exceed $360,000 over three financial years. This may be an attractive contribution strategy for those with an inheritance, a large bonus payment, or proceeds from the sale of an investment.
If you already commenced a bring-forward arrangement in the last year or two, you won’t get the benefit of the increased NCC cap for that arrangement. However, if you’ve been thinking about commencing one of these strategies, now is great time to consider this further.
First, there’s a basic age requirement that you must be aged under 75 at some point in the financial year when you commence the arrangement. (If you plan on activating a bring-forward arrangement in the financial year you turn 75, talk to your advisor because there are additional rules that will restrict when you can make contributions.)
The second key rule concerns your total superannuation balance (TSB). Importantly, it’s your TSB as at 30 June of the previous financial year that counts:
Members who had TSBs of at least $1.78 million but under $1.9 million as at 30 June 2024 may simply make a regular NCC this year of $120,000. However, if your TSB was at $1.9 million or more, any NCCs would be treated as excess contributions.
Be aware that the TSB eligibility limits have changed since last year – and they’ve decreased. In 2023–2024, the thresholds described above were slightly higher at $1.68 million and $1.79 million. So, while the NCC cap and the maximum bring-forward cap have increased, the cut-off points when your eligibility reduces or ceases are lower. Be careful about referring to older advice or information (eg online) that is based on the TSB thresholds for 2023–2024.