The future of super contribution strategies

The legislative trend since 2007 towards lower super contribution caps means financial services professionals must be even more vigilant about maximising their clients’ super contribution opportunities. Although several Federal governments have attempted to simplify the superannuation system, the contribution rules remain complicated, and may become even more so in future years.


The concessional contribution (CC) cap remains at $25,000 in the 2019-20 income year. Although indexed with the average weekly ordinary time earnings (AWOTE) rate, the

CC cap will not change until the accumulated indexation on the 2017-18 base exceeds $2,500. That is unlikely to happen in the 2020-21 income year and will only occur in

2021-22 if the average rate of AWOTE over the next two years exceeds 2.5 per cent per annum. AWOTE has trended at approximately 2.3 per cent per annum over the last two years.

If we project forward with a range of future AWOTE rates, the past and future CC cap may appear as in table one.

Source: Macquarie. *actual figures; ~ projected at the stated CPI and AWOTE rates from 2019-20

From 1 July 2019, the unused CC cap from 2018-19 and subsequent income years can be carried forward for up to five years. The amount carried forward can be used to effectively increase the CC cap in an income year where the client’s total superannuation balance on the prior 30 June is less than $500,000.

Consider, for example, a client (Pat) who stops working in 2019-20 to raise a family. After five years Pat’s CC cap in 2024-25 could be $160,000 if AWOTE increases at 2.5 per cent per annum.

Note also that the removal of the ’10 per cent’ test from 1 July 2017 means that generally clients can claim a tax deduction in relation to personal superannuation contributions up to their CC cap. So, Pat may be able to make a personal contribution in 2024-25 and claim a tax deduction for $160,000.

The combination of these two relatively recent measures presents a valuable opportunity for clients who are not fully using their CC cap each year. Where they foresee the receipt of a large, lumpy amount of assessable income in a future year, for example resulting from the disposal of a CGT asset, there may be a significant opportunity to offset some of the resulting assessable income with a tax deduction.


The annual non-concessional contribution (NCC) cap is defined to be four times the CC cap. So, the annual NCC cap remains at $100,000 in 2019-20 and will increase to $110,000 when the CC cap increases to $27,500. The possible timing of the increase is illustrated in table two, based on different assumed AWOTE rates.

Source: Macquarie. *actual figures; ~ projected at the stated CPI and AWOTE rates from 2019-20

The NCC bring-forward rule

Generally, clients who are eligible to contribute to superannuation may contribute up to three times the annual NCC cap (i.e. up to $300,000 in 2019-20) if the contribution is made in or before the income year of their 65th birthday. 

It’s worth noting that in the 2019 Federal Budget announcement the previous Government proposed changes to allow clients aged 65 and 66 to contribute to superannuation without meeting the work test. The changes would be effective from 1 July, 2020.  Coupled with this, the Government also proposed extending the bring-forward rules by two years, which may mean the option to trigger the bring-forward rule will apply until 30 June following a client’s 67th birthday. 

However, a client’s total superannuation balance (TSB), and whether or not they have triggered the bring-forward rule in either 2017-18 or 2018-19, will impact on their capacity to use the bring-forward rule in the 2019-2020 income year.

The interaction of these three criteria (age, TSB and previous triggering of the bring-forward rule) is complex and is summarised in chart one.

Source: Macquarie.

Interaction of the NCC bring-forward rules with the transfer balance cap

The TSB thresholds referred to above ($1.6 million, $1.5 million and $1.4 million) are determined by reference to the transfer balance cap (TBC) and the annual NCC cap, as follows:

  • TSB threshold of $1.6 million = TBC (currently $1.6 million)
  • TSB threshold of $1.5 million = TBC less the annual NCC cap
  • TSB threshold of $1.4 million = TBC less 2 times the annual NCC cap

The TBC is indexed with the consumer price index (CPI), in contrast to the annual NCC cap, which is indexed with AWOTE. The different rates of indexation may create some anomalies if the indexation of the two thresholds occurs in different years. This possibility is illustrated in table three.


Source: Macquarie. *actual figures; ~ projected at the stated CPI and AWOTE rates from 2019-20

When a client’s TSB exceeds the lower TSB threshold, but doesn’t exceed the middle TSB threshold, their bring-forward NCC cap is two times the annual NCC cap and applies over two income years.

In the table above, the lower TSB threshold decreases from the 2024-25 income year to $1.56 million in the 2025-26 income year. This has occurred because the annual NCC cap has increased to $120,000, but the TBC hasn’t changed from $1.8 million.


Downsizer contributions may be a significant opportunity for those over age 65 to increase their funds in superannuation. From 1 July, 2018, a super contribution of up to $300,000 per person can be made by clients who are age 65 and over, and meet certain eligibility criteria. 

Importantly, there are no maximum age, work test or TSB limitations when making a downsizer contribution, and the contribution is not counted towards either the CC cap or the NCC cap.

Clients can make downsizer contributions even if they have fully exhausted their TBC. If the latter applies, the downsizer contribution funds would have to be held in an accumulation account.

Key criteria for downsizer contributions are:

  • the disposal of a property located in Australia;
  • the property was owned by the client (and/or their spouse or former spouse) for at least 10 years; and
  • a full or partial main residence CGT exemption applies, or would apply if the property is a pre-CGT asset  or owned by a spouse or former spouse.

A downsizer contribution must be made within 90 days of the property settlement, and is a once-off opportunity as it’s only available in relation to the disposal of one property.


The small business CGT concession contribution (SBCC) lifetime cap was indexed to $1.515 million from 1 July 2019. It remains a significant opportunity to make very large superannuation contributions.

In particular, clients that dispose of small business assets which meet the criteria for the 15-year exemption may be able to contribute the entire proceeds (cost base and capital gains) from the sale of the asset to superannuation. Where the small business retirement exemption applies instead to an asset, a lifetime cap of $500,000 applies, limiting the SBCC contribution potential unless another asset qualifies for the 15-year exemption.
Strict criteria apply to the timing and documentation applicable to the contribution, including:

  • if the contribution results from the sale of an asset owned by an individual, the contribution must be made by the later of:
    • the day of lodgement of the individual’s tax return lodgement or 
    • 30 days from the receipt of the capital proceeds;
  • if the contribution results from the sale of an asset owned by a company or trust, the contribution must be made within 30 days of the payment to CGT concession stakeholder;
  • and the choice to treat the contribution as a SBCC contribution must be made using the relevant ATO form no later than the time of the contribution.

As the disposal of business real property may trigger a SBCC contribution opportunity, financial services professionals may wish to review their small business clients and alert them to the possible opportunity. 

David Barrett is the head of Macquarie Technical Services.




A good article. Takes me back to Macquarie's pre 2007 death benefit flow chart where the system was so complicated it was bordering on the impossible to follow.
Demonstrates quite clearly that the next round of significant superannuation changes would be around 2022/23 to try and avoid the massive complications of indexation within the system.

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