Forman Financial Services

Financial Year 2022-23 Non-Concessional Contributions (NCC)

NCCs continue to present a great opportunity for individuals to transfer more wealth to the concessionally taxed superannuation environment. In 2022/23 the annual NCC cap is $110,000.

This financial year is the first year that anyone under the age of 75 can make voluntary, non deductible, contributions – without the need to first satisfy the work test. This has also created more opportunities to equalise super balances between members of a couple. This can help, for example, to avoid the need to retain amounts in excess of the general TBC in accumulation phase and also to minimise the application of the proposed $3m super cap tax from 1 July 2025.


Example: Turning 75 in June

Timothy turns 75 in June 2023. He was not aware that the rules had changed which mean that, despite not working, he could still make NCCs in 2022/23. With a TSB of $1.4m, Timothy can make a NCC in 2022/23 of up to $330,000 provided it is made before 30 June 2023.

If he is unable to source the funds to make the contribution until after 1 July 2023, the trustee will only be able to accept a NCC for Timothy provided it is received by 28 July 2023 (i.e. 28 days after the month in which he turns 75). However, if the contribution is made in July 2023, Timothy’s NCC cap in 2023/24 will be limited to $110,000. This is because he will be 75 on 1 July 2023 and therefore, is not entitled to access the NCC bring forward cap.


Example: Unallocated contributions

Louise had a TSB of $1.65m on 30 June 2022. Louise is in her last year of a 3-year bring forward period and has $150,000 of her NCC bring forward amount remaining.

Provided Louise had a TSB of less than $1.7m on 30 June 2022, she can access any unused NCC cap she previously locked in. That is, Louise can make a NCC of $150,000 in 2022/23.

With Louise’s TSB projected to be valued at more than $1.8m on 30 June 2023, she panics that this will be her last opportunity to make another bring forward NCC. She contributes $330,000 to an unallocated account in her SMSF before 30 June 2023. The SMSF trustees will be required to allocate this contribution to Louise, no later than 28 July 2023.

The contribution will be counted against Louise’s NCC cap in the year that it is allocated. In 2023/24, Louise’s NCC cap will be determined based on her TSB as at 30 June 2023. Assuming Louise’s actual TSB is greater than $1.8m but less than $1.9m, her NCC cap in 2023/24 will be $110,000. Unfortunately, once the amount of $330,000 is allocated in July 2023, she will have excess NCCs.

Before a member triggers their bring forward cap in 2022/23 it is important to note that as at 1 July 2023, the general TBC is increasing to $1.9m. The value of the general TBC is important as it is used to determine the thresholds that, in turn, determine an individual’s NCC cap.

For example, the threshold enabling an individual to trigger a 3-year bring-forward period and make the maximum $330,000 NCC in 2023/24, will increase to $1.68m (from $1.48m in 2022/23). Further, because an individual’s TSB is measured at 30 June 2023, getting the timing of contributions right may make a difference to how much an individual can boost their retirement savings by.


Example: Maximising NCCs over two years

Maria is 69, retired, and had a TSB of $1.46m on 30 June 2022.

Maria can make a maximum NCC of $330,000 by 30 June 2023. This will provide her with around $1.79m with which to fund the start of a retirement income stream.

Alternatively, Maria can make a $110,000 NCC in 2022/23. Subsequently, she could trigger a three-year bring-forward period in 2023/24 – making a further $330,000 NCC in July 2023. Now, over two financial years, Maria has increased her retirement savings by $440,000. She can start her pension in 2023/24 with assets up to the indexed TBC of $1.9m.

For individuals who have already triggered their bring forward period, it is important to understand what remaining cap space they still have available in 2022/23 particularly if they are in a previously triggered bring-forward period. Provided the individual’s TSB did not exceed $1.7m on 30 June 2022, they will be eligible to contribute the full balance of any remaining NCC cap space.

An individuals NCC cap for 2022/23 will be reduced to Nil where they had a TSB greater than $1.7m on 30 June 2022, even if they still had available bring-forward NCC cap space.

If the individuals bring forward period extends to 2023/24, they may benefit from indexation allowing them to contribute the remaining balance of any previously triggered bring forward NCC cap in 2023/24.


Example: Previously triggered bring forward cap

Natalie contributed $180,000 in 2021/22 triggering a three-year bring forward period. Her remaining NCC cap is $150,000.

Unfortunately, as her TSB was valued at $1.75m on 30 June 2022, which exceeds the general TBC, her NCC cap for 2022/23 is reduced to $0. If she made, a $150,000 in 2022/23 this would exceed her NCC cap.

On 1 July 2023, the general TBC is being indexed to $1.9m. Provided Natalie’s TSB on 30 June 2023 is less than $1.9m, she will be able to contribute the remaining $150,000 to use up her available NCC cap space in 2023/24.


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Disclaimer and Warning
The information above is of a general nature only.  It should not be used as a source to make financial decisions.  It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status.  We recommend that if you are looking for advice on this matter, you should contact us.