Planning Opportunity – Carry forward (Catch-up) Concessional Contributions

From 1 July 2018, individuals with total superannuation balances below $500,000 have been allowed to carry forward the unused portion of their Concessional Contribution cap for up to 5 years (rolling period). Examples of concessional contributions are employer superannuation guarantee contributions, salary sacrifice contributions or contributions that an individual has claimed as a tax deduction.

This provision will first be able to be utilised from in the 2020 financial year being the first year of being able to accumulate unused Concessional Contributions. Any carried forward amounts that are not used within 5 years will expire.

Example

Assumptions:

  • An individual has total superannuation balances of less than $500,000.
  • The individual makes (or their employer makes) $20,000 of Concessional Contributions in the 2019 financial year.
  • The concessional contributions cap is $25,000 in the 2019 & 2020 financial years.

The above scenario means the individual will be able to contribute a maximum of $30,000 on concessional contributions to their superannuation fund in the 2020 financial year i.e. $5,000 that remained unused from the 2019 financial year added to the 2020 financial year contribution cap of $25,000.

Have a superannuation question? Ask your Roberts & Morrow adviser.

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