The Government has released draft legislation which it says will make superannuation more flexible for older Australians, by changing the work test, bring-forward rule, and spouse contributions. Under the proposed changes, released for consultation, people aged 65 and 66 won’t need to meet the ‘work test’ to make voluntary super… Read More »Draft legislation to make super more flexible for older people released
Update: note the potential changes announced in the 2016 Budget.
The three-year bring-forward provision allows some super fund members to use three times the non-concessional contributions cap during a three-financial year period. For example, a member may have a $ 150,000 non-concessional contributions cap, and they could make the following contributions without triggering excess contributions tax:
- Year 1: $ 200,000
- Year 2: $ 200,000
- Year 3: $ 50,000
- Year 1: $ 450,000
- Year 2: $ 0
- Year 3: $ 0
Though, of course, not the full amount of the three-year bring-forward needs to be used once triggered.
Also care must be taken when using the three-year bring-forward, as even small errors can lead to large amounts of contributions tax – in some cases 93% or even higher of the original contributions.