Non-concessional contribution rules

Technical resource

Non-concessional contributions are contributions where a tax deduction has not been claimed. There are rules that determine an individual's available cap. 

For Adviser use only

Non-concessional contributions are contributions where a tax deduction has not been claimed. The contributions are not taxable to the super fund and are preserved benefits. Non-concessional contributions include:

  • Personal after tax contributions 

  • Spouse contributions

  • The non-taxable amount of foreign super transfers 

  • Any concessional contributions in excess of the concessional contribution cap that are not released

Contributions are counted against the cap in the financial year they are allocated to the member’s account. The non-concessional contribution cap is set at four times the current concessional contribution cap. For the 2020/21 financial year, the cap is $100,000. However, non-concessional contributions cannot be made if a member’s Total Superannuation Balance (TSB) is $1.6 million or more on 30 June prior to the commencement of the financial year in which the contributions are to be made. An exception to this rule is where the contributions relate to a structured settlement or order, for personal injuries.

The following contributions are not measured against the non-concessional contributions cap:

  • Government co-contribution 

  • Contributions relating to structured settlements or orders for personal injuries 

  • Contributions relating to and not exceed the CGT cap amount

  • Downsizer contributions

The bring-forward rule

Where a member's TSB is less than $1.6 million, and they are less than age 65 as at 1 July of the financial year a contribution is to be made, the ‘bring-forward’ non-concessional contribution cap that can be triggered is determined by their TSB just before 1 July, as shown in the table below. They are not required to contribute the amount all at once, but once triggered, it’s in force for the duration of the two or three year bring-forward period.

TSB on 30 June 2020

Non-concessional contributions cap for the first year

Bring-forward period

Less than $1.4 million 

$300,000 

3 years 

$1.4 million to less
than $1.5 million 

$200,000 

2 years

$1.5 million to less
than $1.6 million 

$100,000 

No bring-forward

Members aged 64 on 1 July of the financial year who make a non-concessional contribution on or after they turn 65, will also need to meet the work test1 in the financial year of contribution, before the contribution is made.

Excess contributions

Where a member exceeds their non-concessional contribution cap, the ATO will issue the member with a tax assessment notice outlining the amount in excess and any associated penalty tax. The ATO will also issue a release authority which the member can send to their nominated super fund to have the excess amount (plus associated earnings) withdrawn.

Members have the option of withdrawing excess non-concessional contributions made from 1 July 2013 and any associated earnings (calculated on a notional basis), with the earnings only taxed at the individual's marginal tax rate (less a 15% non-rebatable tax offset).

Should the member nominate to leave the excess non-concessional contributions in the super fund, the excess contribution amount is taxed at the highest marginal tax rate, and the source of funds to pay this amount must be from the super fund.

1. Individuals who qualify for the Work Test Exemption (WTE) are also able to rely on meeting the work test in the immediate previous financial year. The WTE requires having a TSB of less than $300,000 as at 30 June in the financial year immediately before wishing to utilise this exemption

Next: Concessional contribution rules

Concessional contributions are contributions where a tax deduction has been claimed. A general cap applies but some may be able to use carry forward amounts.
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Contact BT Technical Services for more information

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FOR ADVISERS USE ONLY

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