Concessional and non-concessional contributions caps to rise from July 1, 2014
Did you know that the present $25,000 concessional contributions cap will increase to $30,000 come July 1, 2014? Many will welcome the $5,000 rise, seeing the cap of $25,000 has been in place since 2009-10.
The imminent increase will bring about a range of changes to various contribution strategies for self-managed superannuation funds (SMSF) members and Australian Prudential Regulation Authority (APRA) regulated fund members alike. It is therefore important to start thinking about planning for the increase.
A temporary higher cap of $35,000 has also been available to those individuals aged 59 and over as of June 30, 2013. It will extend to those aged 49 years or over on June 30, 2014 (applying from July 1, 2014).
The table below summarises these new caps:
|Income year||Cap for those aged 59 years or over on June 30, 2013||Cap for those aged 49 years or over on June 30, 2014||Cap for those aged below 49 on June 30, 2014|
The indexation of the concessional contributions cap has some additional flow-on effects to the non-concessional contributions cap, with this post-tax contributions cap being six times the concessional contributions cap. Therefore, from July 1, 2014, the non-concessional contributions cap will increase from $150,000 to $180,000.
Further, under “bring forward” rules, an individual who is under 65 years of age can bring forward two years’ worth of future non-concessional contributions entitlements. From July 1, 2014, superannuation fund members aged 64 or less will be eligible for a higher bring-forward amount of $540,000 (up from $450,000).
Consult this office to find out what strategies you can put into place to take advantage of the soon-to-be raised contributions caps.