If you didn’t contribute the full $25,000 in the 2018-19 financial year, and your total super member balance was less than $500,000 as at 30 June 2019, then you may be able to increase your deductible contributions this financial year – ie contribute more than $25,000 in deductible contributions.

The ability to carry forward concessional contributions applies from 1 July 2018, and this financial year (2019-20 financial year) is the first year an individual can access their unused carry forward concessional amount – essentially increasing their concessional contributions cap by the amount unused in the previous year.  Unused amounts are available for a maximum of five years and will expire after this.

Concessional contributions include employer contributions (super guarantee and salary sacrifice) and personal contributions where you have claimed a tax deduction.

Example

Melissa’s total concessional contributions in the 2018-19 financial year were $10,000.

Melissa’s total super balance as at 30 June 2019 was $380,000 – therefore meeting the criteria of less than $500k balance.

Melissa can ‘carry forward’ the unused $15,000 to later financial years – up to 5 years.

Melissa has a particularly high taxable income this year (ie the 2020 FY), and would like to make more than the maximum $25k deductible contributions to reduce her taxable income.

Melissa decides to use the unused ‘carry-forward’ contribution of $15,000, in addition to the $25,000 – increasing her cap to $40k.

Melissa ensures that the $40k is received by her super fund prior to 30 June.

This ‘carry forward’ contribution strategy would be particularly beneficial if you are selling an asset and likely to make a taxable capital gain – ie a higher deductible personal contribution may assist in reducing your tax liability in the year of sale.

Remember:

  • Your total superannuation balance must be below $500,000 on 30 June of the prior year before you utilise any carried forward amount (within the 5-year term); and
  • In some cases, an additional 15% tax can apply (30% total) to concessional contributions made to super where income and concessional contributions exceeds certain thresholds ($250,000 in 2019-20). Your income could be higher than usual in the year when you sell an asset for a capital gain.

This is an excellent concession to help you top up your superannuation.