After Tax Super Contributions are officially referred to as Non Concessional Contributions.
What is a Non Concessional Contribution?
This is a contribution made into a superannuation account where a tax deduction has not been claimed by any person or entity in relation to the contribution – hence an ‘after tax super contribution’. These are contributions in addition to mandatory contributions made by your employer.
How do I make an After Tax Super Contribution
An after tax super contribution is generally made from your personal bank account into your superannuation fund.
If you have a Self Managed Superannuation Fund (SMSF), it is as simple as transferring the amount that you would like to contribute from your personal bank account to the bank account of the SMSF.
Otherwise, if you are unsure, you should speak to an adviser, or contact your superannuation provider for information on how to make such contributions.
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Click here to find out how a Non Concessional contribution could make you eligible for the Government Superannuation Co-Contribution.
How much can I contribute as a Non-Concessional Contribution?
The Non Concessional Contribution cap is $150,000 per financial year. However, you are able to ‘bring forward’ up to two years’ worth of the cap while you are under the age of 65.
This means that you can contribute up to $450,000 in one financial year, per person.
The ‘bring forward’ rule is triggered in the year that Non-Concessional Contributions for a person exceeds $150,000.
For example, if you made total after tax super contributions of $180,000 throughout the financial year, you would only be able to contribute a total of $270,000 over the following two financial years.
IMPORTANT UPDATE AS AT 1 JULY 2014: The Non Concessional Contribution Cap as of 1 July 2014 is now $180,000 – meaning you can contribute up to $540,000 in one year using the ‘bring forward rule’.
IMPORTANT UPDATE AS AT 1 JULY 2017: The Non Concessional Contribution Cap as of 1 July 2017 is now $100,000 – meaning you can contribute up to $300,000 in one year using the ‘bring forward rule’. Transitional Rules apply for individuals who triggered the Bring Forward Rule in one of the 2 financial years preceding the 2017/18 financial year. Click here to read more.
What if I exceed the Non Concessional Contribution Cap?
Exceeding the Non Concessional Contribution Cap may result in Excess Contributions Tax of 46.5% (47% for 2014/15 and later financial years).
This Excess Tax can be paid using your superannuation savings; however you will need to obtain the release authority issued by the Australian Tax Office (ATO) to get your superannuation fund to release the amount of tax from your super.
Can I make After Tax Super Contributions if I am over age 65?
Anyone under age of 65 can make Non-Concessional Contributions.
If you are between ages 65 an 75, you will need to meet the ‘Work Test‘ in order to be eligible to make after-tax super contribution.
To satisfy the Work Test, you need to work at least 40 hours over 30 consecutive days in the financial year that the Non Concessional Contribution is made. Unpaid work does not count.
If you are over the age of 75, your fund is unable to accept Non Concessional Contributions – only mandatory super contributions made into your account by your employer.
If you would like anything clarified or have any further questions about After Tax Super Contributions or any other topics, please do not hesitate to leave a comment.
Here is an article on the difference between Concessional and Non Concessional Contributions.