NICK BRUINING: Here’s what changes with superannuation contribution caps now locked in

Increases to superannuation contribution caps have been locked in.

As foreshadowed in Your Money last month, the average weekly ordinary time earnings figure for the December quarter increased by a sufficient amount, and was enough to trigger a $2500 increase to the concessional contribution cap.

That means the new concessional cap that will apply from July 1 will be $32,500 a year.

For those with a total superannuation balance of less than $500,000, the carry-over concession would allow them to make a one-off, tax-deductible contribution of up to $175,000 — less any concessional contributions received in the previous five years.

Non-concessional contributions are tied to four times the concessional contribution cap, so this will jump from the current level of $120,000 a year to $130,000 from July 1.

Under the bring-forward rules, most investors up to the age of 75 could make a single non-concessional contribution of up to $390,000. Restrictions apply when your total superannuation balance is close to the transfer balance cap, which is also set to increase on July 1. Currently sitting at $2 million, this will jump by $100,000 to $2.1m.

Unfortunately, there will be no increase to the super downsizer contribution limit of $300,000.

Available to anyone over 55, up to $300,000 from the proceeds of a home sale can be dumped into super within 90 days of settlement.

The home must have been lived in for at least 10 years, and it must be identified as a downsizer contribution at the time the payment to the super fund is made.

Super downsizer contributions are a one-off, and do not count towards contribution caps.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association