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.

Douglas Thomson

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Carry-forward Concessional Contributions

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