Key takeaways
- Non-concessional contributions are after-tax, so they are not taxed again on the way into the fund.
- They have a separate annual cap, larger than the concessional cap.
- A bring-forward rule can let you contribute up to three years' worth at once.
- If your total super balance is at or above the general transfer balance cap, your non-concessional cap can be nil.
Non-concessional contributions are made from money you have already paid tax on, such as savings or proceeds from selling an asset. No deduction is claimed, and they are not taxed again when they enter the fund. They are a common way to move wealth into the concessionally taxed super system as retirement approaches.
The annual cap
There is an annual non-concessional cap, set higher than the concessional cap. Exceeding it can lead to extra tax or a requirement to remove the excess, so it pays to track contributions across all your super accounts, not just the SMSF. The current figure is published by the ATO on its contribution caps page.
The bring-forward rule
If you are under the relevant age and your total super balance allows it, the bring-forward rule lets you bring forward up to three years of non-concessional cap and contribute it in one go. This is useful for a one-off event, such as receiving an inheritance or selling a property. How many years you can bring forward depends on your total super balance at the start of the year.
The balance limit that reduces your cap
Your non-concessional cap is tied to your total super balance. Once your total super balance reaches the general transfer balance cap, your non-concessional cap for the year becomes nil, meaning you cannot make further after-tax contributions without an excess. This is a common trap for people with larger balances, so check your total super balance before contributing.
Plan the timing
Because the bring-forward rule and the balance limit interact, the order and timing of contributions matter. A contribution that looks fine in isolation can trigger an excess once your balance and other contributions are taken into account. Given the amounts involved, this is an area where personal advice usually pays for itself.
Frequently asked questions
- Are non-concessional contributions taxed?
- Not on the way in. Because they are made from after-tax money and no deduction is claimed, non-concessional contributions are not taxed again when they enter the fund. Earnings on them inside the fund are still taxed normally.
- How does the bring-forward rule work?
- It lets eligible people contribute up to three years of the non-concessional cap in a single year. How much you can bring forward depends on your age and total super balance at the start of the year.
- Why might my non-concessional cap be nil?
- Your cap depends on your total super balance. Once that balance reaches the general transfer balance cap, your non-concessional cap for the year is nil, so further after-tax contributions would be excess contributions.
