The Government has introduced a $500,000 lifetime cap on non-concessional contributions from 7:30pm (AEST) on 3 May 2016 (Budget Night).
This lifetime cap will replace the existing annual non-concessional contribution cap of $180,000 per year (or $540,000 over 3 years for those under 65).
The $500,000 lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007.
Where individuals have exceeded the cap prior to the commencement of the new rules, they will be taken to have used up their lifetime cap, but will not be required to withdraw any excess. However, excess non-concessional contributions made after 7:30pm (AEST) on 3 May 2016 will need to be removed or subject to penalty tax.
These changes may affect many clients who have previously made non-concessional (undeducted contributions) and may restrict the amount they can contribute post Budget Night.
If you are considering making non-concessional contributions, please contact us to discuss your individual situation.