Contribution Caps for 2019/20 Financial Year

9 Jul 2019

Lyn Formica

Head of SMSF Technical & Education Services

With a new financial year upon us, you may be thinking about what contribution caps apply for the 2019/20 financial year.

Concessional Contributions

The concessional contributions cap remains at $25,000 for the 2019/20 year.

However, new rules allow an individual’s concessional cap for the 2019/20 year to be increased by the unused portion (if any) of their concessional cap for the 2018/19 year. This increased cap amount may be utilised in the 2019/20 year provided the individual’s total superannuation balance was less than $500,000 at 30 June 2019.

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 their SMSF.

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 2019/20 year remains at $100,000 for individuals who had a total superannuation balance of less than $1.6m at 30 June 2019. Individuals who had a total superannuation balance of $1.6m or more at 30 June 2019 are unable to make any non-concessional contributions in the 2019/20 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 are made for a spouse.

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 2019 Bring Forward Amount if triggered in 2019/20 Bring Forward Period if triggered in 2019/20

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

Since 1 July 2018, some individuals have been 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.

But:

  • the contribution must be made within 90 days of the change of ownership (generally settlement date), and
  • a downsizer contribution form must be lodged with the fund at the time of making the contribution (or before).

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.

Meg Heffron provides more information about downsizer contributions and their potential uses.

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 or the new carry forward concessional contribution rules, please give us a call to discuss.