Birth date impacts bring-forward NCCs
The provisions allowing SMSF members to trigger the NCC bring-forward rules in a subsequent financial year are birth-date sensitive.
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A senior technical executive has alerted practitioners to an anomaly in the non-concessional contributions (NCC) rules with regard to members who reach age 75 on 1 July of any given financial year and warned them not be deceived by it.
Colonial First State (CFS) senior technical services manager Linda Bruce noted the issue specifically applies to SMSF members who are about to turn 75 on that date and are wanting to bring forward three years’ worth of NCCs in that financial year.
“The issue here is that in order to trigger the bring-forward [NCC provisions] in the next financial year the client must be under age 75 at 1 July 2025 [for this income year],” Bruce told listeners of the latest CFS First Tech Podcast.
“So let’s think about that. If the client is turning 75 in June 2025 or on 1 July 2025, they will not be under age 75 on 1 July 2025 and therefore they are not eligible to [bring forward their] non-concessional contributions cap in the next financial year.”
According to Bruce, the rules do not allow for any leeway as to the exact time a member turns 75.
“We have advisers who actually ask us: ‘My client was born at 11am [on 1 July] and they want to [make an NCC] at 8am [using the bring-forward rules] on that day, is that okay?’ Unfortunately not,” she said.
CFS head of technical services Craig Day reiterated this point.
“It’s a bit like the horse’s birthday, isn’t it? Everyone is taken to have turned their age at the beginning of the day and so therefore we don’t have intraday [situations] of people turning 75,” Day confirmed.
Bruce acknowledged clients in this situation will still be able to use the NCC bring-forward provisions if their total super balance is under $1.9 million in the current income year.
April 23, 2025
Darin Tyson-Chan
smsmagazine.com.au
