Bring forward rules when caps are changing

The contribution caps change from 1 July 2024. In particular, the annual non-concessional cap goes from $110,000 to $120,000. But how exactly does that work for people using the bring forward rules?

In fact more specifically, how does it work for those who’ve already locked in a bring forward period before 1 July 2024?

The short answer is that they don’t get the benefit of the increase.

For example, Frank made non-concessional contributions of $200,000 in 2023/24. His total super balance was less than $1.68m at 30 June 2023 so this locked in a 3 year bring forward period for him (1 July 2023 – 30 June 2026). At the time, this was set at $330,000 so he has $130,000 left to contribute in the two remaining years (2024/25 and 2025/26).

Even though the annual cap will actually be higher in those last two years, nothing changes for Frank.

It’s why at times like this – when contribution caps are increasing – people often think carefully about exactly when to trigger their bring forward. If Frank, for example, was making his contribution decisions in March 2024, he might have chosen to contribute only $110,000 in 2023/24 and save his bring forward for next year. That would give him $360,000 to play with in 2024/25 (ie, the full benefit of the cap increase). Given that caps don’t increase every year, delaying triggering a bring forward can be well worth doing at the right times.

But not everything stays the same for Frank during his 1 July 2023 – 30 June 2026 bring forward period.

Remember that there is one special rule for people like Frank who are already in a bring forward period and have two years left to contribute their remaining $130,000. For Frank to be able to utilise his remaining $130,000 in 2024/25 without breaching his non concessional contribution cap, his total super balance has to be less than the general transfer balance cap ($1.9m) at 30 June 2024. The same would apply in 2025/26 if he’s still got some of his cap left.

It’s likely the general transfer balance cap will increase to $2m from 1 July 2025. Frank will benefit from this particular increase. If he’s still looking to make some of these contributions in his final bring forward year of 2025/26, the threshold he has to watch will be $2m, not $1.9m.

That could be beneficial if Frank has left the remainder of his contributions to the last year and his balance has increased a lot in the meantime.

We have a whole course on how the bring forward rules work in our Education Bites series – we’ve recently updated it to accommodate all the cap changes from 1 July 2024. Select the image below to learn more and subscribe.