Non-Concessional Contributions

Non-concessional contributions are voluntary super payments made from after-tax money - a bank transfer into super, not a payroll arrangement. Because the tax was already paid, there is no 15 percent contributions tax on the way in, unlike concessional contributions. The annual cap is $120,000, and contributions stop at age 75. Earnings inside the fund are still taxed at 15 percent, so the after-tax entry does not create a tax-free envelope - it creates a cheaper-than-marginal one.

The bring-forward rule is the feature that gets the attention: eligible members can bring forward two future years and contribute up to $360,000 in one go. Eligibility depends on your total super balance at the previous 30 June - under $1.76 million unlocks the full $360,000, with the amount stepping down to $240,000 and then $120,000 as the balance rises, and to nil above $2.04 million. Both caps are yours to manage, and the ATO counts them separately.

The mechanics are a bank transfer with a tax outcome. Money moves from your account into super, no deduction is claimed, and no 15 percent contributions tax applies - the money enters as taxed dollars. The fund taxes the earnings at 15 percent from that point, which is still below every marginal rate above the tax-free threshold. The annual cap is $120,000, counted against your after-tax transfers across the financial year.

The bring-forward rule triples the picture. Electing it in a financial year lets you contribute up to $360,000 immediately, using two future years' caps in advance. The amount available depends on your total super balance at the previous 30 June: under $1.76 million unlocks $360,000; $1.76 million to below $1.9 million unlocks $240,000; $1.9 million to below $2.04 million unlocks $120,000; and $2.04 million or more unlocks nothing. A member who brings forward the full amount then waits two financial years before the annual cap resets.

The over-cap case is where the arithmetic turns hostile. Contributions above the cap are assessed for excess non-concessional contributions tax at 47 percent - the top marginal rate including Medicare - on the excess amount. A $400,000 contribution against a $120,000 cap is a $280,000 excess and a tax bill of roughly $131,600. The ATO offers release authorities to withdraw the excess rather than pay the tax, but the sequence is paperwork the contribution was supposed to avoid.

The after-tax route is the lever for Australians with lump sums that are not payroll money: an inheritance, the sale of an investment property, a redundancy payout after tax, or the proceeds of downsizing the household budget rather than the house. Earnings inside super at 15 percent beat the marginal rate the same money would face outside, and the concessional contributions entry covers the pre-tax lever that sits alongside it. The bring-forward rule is also the mechanics behind lump-sum strategies built around the caps deliberately. The caps are per person, which is why couples planning a lump sum check both balances first.

A colleague named Brent (yes, that Brent) put a $400,000 inheritance into super with a total balance just over $1.9 million, assuming 'super is always a good idea'. His cap at that balance was $120,000; the $280,000 excess triggered an assessment at 47 percent and an ATO letter that ruined a month. The strategy was sound at a $500,000 balance and expensive at $1.9 million. The highest-leverage thing most Australians can do is check the total super balance on myGov before the transfer, not after the ATO's.