Building a strong superannuation balance is key to securing your financial future, and one way to boost your savings is through non-concessional contributions (NCCs). If you want to make the most of your super, understanding how NCCs work, their limits, and their benefits can help you develop a smarter retirement strategy.
Non-concessional contributions are voluntary after-tax contributions made to your super fund. Unlike concessional contributions, which are taxed at 15% and include employer Super Guarantee (SG) payments and salary sacrifice, NCCs come from money that has already been taxed. This means they aren’t subject to contributions tax when entering your fund, making them an attractive way to top up your superannuation.
To prevent excessive contributions and ensure fair tax treatment, the Australian Taxation Office (ATO) sets limits on NCCs. For the 2024–25 financial year, the annual non-concessional contributions cap is $110,000 per individual.
If you're under 75 years old and meet the eligibility criteria, you may also be able to use the bring-forward rule, allowing you to contribute up to $330,000 over three years in a single financial year. This strategy can be particularly useful if you’ve received an inheritance, sold a property, or have extra funds you want to move into super for long-term growth.
Most Australians can make NCCs, but there are some important restrictions:
If you're under 75 years old, you can contribute within the annual cap.
If you're between 67 and 74, you no longer need to meet a work test to make NCCs, but the bring-forward rule is only available if you were under 75 at the start of the financial year.
Individuals with a total super balance of $1.9 million or more as of 30 June 2023 are not eligible to make NCCs in the 2023–24 financial year.
Making non-concessional super contributions can be a powerful way to build your retirement savings. Some key benefits include:
Tax-free investment earnings: Once inside your super, earnings are taxed at a lower rate than personal investments, allowing for more efficient wealth accumulation.
No contributions tax: Because NCCs come from after-tax income, they don’t incur the usual 15% super contributions tax, ensuring more of your money stays in your account.
Estate planning benefits: Additional contributions may help reduce potential death tax liabilities for beneficiaries who are not tax dependants, which can make a significant difference in wealth transfer strategies.
While NCCs offer several advantages, it’s important to be mindful of the risks:
Exceeding contribution caps: If you contribute more than the annual limit, the excess amount may be taxed at 47%, significantly reducing the benefit of your contribution.
Restrictions for high-balance members: If your total super balance exceeds $1.9 million, you can’t make NCCs without breaching ATO rules, which could lead to penalties.
Superannuation access rules: While super is a tax-effective savings vehicle, funds are typically locked away until you reach preservation age, so it’s important to be certain you won’t need the money before then.
Making an NCC is straightforward, but ensuring compliance with ATO non-concessional contribution rules is essential. Here’s how to contribute:
Choose your payment method: Contributions can be made via BPAY, direct transfer, or in some cases, employer payments on your behalf.
Check your contribution limits: Make sure you don’t exceed the cap to avoid tax on excess contributions and potential penalties.
Notify your super fund: Some funds require notification of NCCs to ensure they are correctly classified, helping you avoid administrative errors.
Wondering if non-concessional super contributions are right for you? Speak to a Findex superannuation specialist today. Our team can help you assess your eligibility, maximise your superannuation strategy, and navigate any contribution limits or tax implications.
Whether you’re looking to boost your retirement savings, make the most of the bring-forward rule, or ensure compliance with the latest ATO non-concessional contribution rules, expert guidance can help you get it right.
This information is provided for your assistance and education about non-concessional super contributions. It is not an opinion or recommendation. You should consider obtaining appropriate advice before making any decision about non-concessional super contributions.
While all reasonable care is taken in the preparation of the material in this document, to the extent allowed by legislation Findex accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex assumes no obligation to update this material after it has been issued. You should seek professional advice before acting on any material.
This document contains general information and does not constitute legal or taxation advice. If you need legal or taxation advice, we recommend you speak to a qualified adviser.
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