Heffron | Contribution Caps for 2018/19 Financial Year

Contribution Caps for 2018/19 Financial Year

With a new financial year upon us, you may be thinking about what contribution caps apply for the 2018/19 financial year.

Concessional Contributions

The concessional contribution cap remains at $25,000 for the 2018/19 financial year. 

The concessional contribution cap captures both employer contributions (including superannuation guarantee and salary sacrifice contributions) and personal contributions where a tax deduction is being claimed.

Non-concessional Contributions

The non-concessional contributions cap for the 2018/19 financial year remains at $100,000 for individuals who had a total superannuation balance of less than $1.6m at 30 June 2018.  Individuals who had a total superannuation balance of $1.6m or more at 30 June 2018 are unable to make any non-concessional contributions in the 2018/19 financial year without exceeding their cap (ie their cap is $nil).

The non-concessional cap captures personal contributions where a tax deduction is not claimed or contributions made for a spouse.

Broadly speaking, total superannuation balance is all of the money an individual has in superannuation across all superannuation funds to which they belong.  Importantly, it is not just the amount in the SMSF.

As you may be aware, in certain situations, it is possible to “bring forward” the non-concessional contributions cap from a future year and use it in the current year.  The bring forward amount and periods are shown in the table below.

Total Superannuation Balance on 30 June 2018

Bring Forward Amount if triggered in 2018/19

Bring Forward Period if triggered  in 2018/19

 Less than $1.4m

 $300,000

 3 years

 ≥ $1.4m but less than $1.5m

 $200,000

 2 years

 ≥ $1.5m but less than $1.6m

 $100,000

 n/a

 $1.6m or more

 $nil

 n/a

 

Downsizer Contributions

From 1 July 2018, some individuals are eligible to make a new type of contribution called a “downsizer contribution”. 

Generally speaking, an individual is eligible to make a downsizer contribution if they are over age 65 when the contribution is made, they sell their home on or after 1 July 2018, and they owned the home for at least the last 10 years.

Importantly:

  • there is no maximum age limit (rather the contributor must simply be aged 65 or over),
  • there is no requirement to satisfy a work test, and
  • unlike non-concessional contributions, downsizer contributions can be made regardless of the size of the individual’s total superannuation balance.

Downsizer contributions are limited to the lesser of:

  • $300,000 per person (eg $600,000 combined if both members of a couple are eligible), or
  • the capital proceeds from the disposal of the dwelling.

If you are unsure if you are eligible to make contributions to superannuation or use bring forward mode, or would like further information on downsizer contributions, please give us a call to discuss.