Superannuation Contributions – Carry Forward Concessional Contributions

If you do not use the full amount of the general concessional contributions cap in a financial year (starting from 2018-19), you have an unused concessional contributions cap amount for that year.  These unused cap amounts can be used in any of the next five financial years (if you have a total superannuation balance of less than $500,000).  This allows you to make extra concessional contributions above the general concessional cap without paying additional tax for exceeding the concessional contribution cap.

An example is probably the best way to explain:

For 2018-19 and 2019-20 and 2020-21, the general concessional cap was $25,000. If, in each of these years, the superannuation contributed by your employer was $10,000, you will have unused concessional contribution cap amounts for each of those years of $15,000 giving a total of $45,000.

For 2021-22, the general concessional cap is $27,500.  Let’s say you sold your holiday house and it is looking like you will have a $200,000 capital gain.  Your employer has once again made contributions of $10,000 (considered part of your concessional cap).  This means you can contribute $17,500 to your superannuation fund and claim a deduction under the general concessional cap.  Assuming your total superannuation balance at 30 June 2021 is less than $500,000 you are also able to contribute a further $45,000 being your unused concessional cap amounts.  This will give you a deduction of $62,500 to use against the $200,000 capital gain.

Things to remember:

  • To take advantage of the carry forward concession contributions, your total superannuation balance at the 30 June prior to the year you want to use the unused concessional cap amounts must be less than $500,000.
  • Any unused concession contributions cap amount that is not used after five financial years, can no longer be carried forward.
  • To make any contributions into superannuation, you must ensure you meet the necessary eligibility requirements for example in regards to age.
  • Concessional contributions are taxed at 15% in the superannuation fund.
  • Once the money is contributed to superannuation, you must meet a cashing condition (for example retirement after preservation age or reached age 65) in order to access the funds.

Details of your available unused concessional cap amounts that have accrued since 1 July 2018, together with details of your total superannuation balance are available via myGov or alternatively, if you are an Avance client, we can access this information via the Tax Office Online Services.   It is important to remember that sometimes the values reported on myGov are not accurate, for example, if you have a self managed superannuation fund that has not reported details yet or you are checking early in the financial year prior to your industry fund reporting details.

The above information is only general in nature and should not be considered specific advice.  Please contact our office for more information, particularly before you take advantage of the carry forward concessional contributions to ensure you have taken all factors into consideration.