Carry-forward Concessional Contributions
Posted on February 10th, 2021 by Douglas Thomson
A reminder about the ability to make further super contributions and claim a tax deduction for them.
Where superannuation is paid on your behalf and claimed as a tax deduction, either by you or your employer, the maximum annual contribution is capped at $25,000.
From 1 July 2018, individuals who have a total super balance of less than $500,000 can carry forward any unused cap to the next financial year on a rolling five-year period.
For example, your employer contributed $5,000 of superannuation guarantee on your behalf in 2019 and you made a personal contribution of a further $10,000 and claimed a tax deduction in your personal return. You have therefore only used $15,000 of your $25,000 cap. In 2020, you can contribute a maximum of $35,000 being the 2020 cap of $25,000 plus your unused cap from 2019 of $10,000.
So, let’s say in 2020 the employer contributed $10,000 and you did nothing. The position now looks like this:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Annual Cap | 25000 | 25000 | 25000 | 25000 | 25000 |
| Carry forward Unused Cap | 0 | 10000 | 25000 | 50000 | 75000 |
| Available Cap | 25000 | 35000 | 50000 | 75000 | 100000 |
| Contribution Employer | 5000 | 10000 | |||
| Contribution Personal | 10000 | 0 | |||
| Total Contributions | 15000 | 10000 | 0 | 0 | 0 |
| Unused Cap at Year End | 10000 | 25000 | 50000 | 75000 | 100000 |
For the 2021 year, you now have an unused cap of $50,000. The availability of this mechanism is a very powerful strategy to use for several reasons, including the ability to increase your super balance, reduce your taxable income and /or manage effects of once-off taxable events like capital gains.
