Further Clarification of Super Proposals
The operation of the bring forward provisions under the proposed new regime is a little different to the current rules. The assumption that the full $540k bring forward limit can be carried forward to the next two years is not correct.
Let’s consider a few cases.
If a member (under age 65) begins their 3 year bring forward provision in the 17/18 year their total allowable non-concessional contributions up to the end of the 19/20 year is $300k as you would expect (3 x $100k).
If the same member had a $1.6m (or greater) balance in super at 30 June 2016 they could not make any further non-concessional contributions.
If the member’s balance at 30 June 2016 was $1.55m they could only make a further $50k non concessional contribution as that would bring them to the $1.6m cap.
The situation is more complex if the 3 year bring forward rule is triggered in the 16/17 year. Under the current rules the $540k would be locked in. The proposed new rules take a different view. In the 16/17 year the cap is $180k. In the 17/18 and 18/19 year the cap is $100k. The sum of these three caps is $380k. The 3 year bring forward provision, if triggered this year, will therefore be $380k. If already triggered in the 15/16 year it would be $460k.
It is not clear how these caps are intended to work. It is possible that the full $540k could be made in the 16/17 year with the reduction only occurring if there is a residual balance. This would not be unreasonable considering that some members will have taken the full $540k allowable contribution in the 15/16 year which, under the 3 year rule, will take their count through to the end of the 17/18 year. As this legislation will not take effect until 1 July 2017 (if passed) and the government will want to avoid any accusations of retrospectivity it is entirely possible that the full $540k may be allowable if made this year.
We await further clarification.