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Contributions caps and taxation of contributions

Concessional contributions carry forward

Section: 5.2

Clients with a total superannuation balance below $500,000 can carry forward any unused concessional contributions cap amounts that accrue from 1 July 2018 onwards, for up to five financial years. This allows eligible members who do not use all of their concessional cap in a particular financial year, to carry forward their unused concessional cap amounts to future years. Effectively, this means a client cannot access a higher cap than the general concessional contributions cap until 1 July 2019 at the earliest.

Carry-forward concessional contributions may assist clients with breaks in employment to make 'catch-up' contributions when they return to work.

Eligibility

To be eligible to make catch-up concessional contributions in a year a client must meet all of the following conditions:

  • have a 'total superannuation balance' of less than $500,000 as at 30 June at the end of the financial year immediately preceding the financial year in which the concessional contribution is to be made. The definition of 'total superannuation balance' is the same as that used for the non-concessional contribution cap. Broadly, an individual's total superannuation balance includes the value of their superannuation interests in the accumulation phase, the adjusted balance of their transfer balance account (if they have one), and 'in transit' rolled-over superannuation benefits.
  • have previously unused concessional contributions cap amounts that have accrued in one or more of the five financial years preceding the year in which the concessional contribution is made.

A member's unused concessional contributions cap amount for an income year is the difference between the client's concessional contributions and the concessional contributions cap for an income year after 1 July 2018. That is, an individual cannot have unused concessional contributions cap amounts from a financial year earlier 2018-19.

Applications

If a client is eligible to make catch up contributions they can add any previously unused concessional cap amounts from the previous five financial years to their current year's concessional cap.

Any unused concessional contributions cap amount is applied in order from the earliest year to the most recent year.

Any unused concessional contributions cap amount that is not applied after five financial years can no longer be carried forward.

Examples of unused concessional cap carry-forward:

  2018-19 2019-20 2020-21 2021-22 2022-23 2023-2024 2024-25
Concessional contributions $10,000 $10,000 $0 $35,000 $25,000 $25,000 $28,000
Unused general CC cap for year $15,000 $15,000 $25,000 $0 $0 $0 $0
Unused CC carry -forward amount applied N/A $0 $0 $10,000 $0 $0 $3,000
Cumulative available unused CC cap amount remaining for that year $15,000 $30,000 $55,000 $45,000 $45,000 $45,000 $37,0001

1. The remaining unapplied $5,000 from 2018-19 is no longer available, as it wasn't within past 5 years, and $3,000 has been applied in current year from 2019-20. $45,000 - $5,000 = $37,000.

Note: The above example assumes the basic concessional contributions cap remains at $25,000 and the individual's total superannuation balance is less than $500k at 30 June 2021 and 30 June 2024.

Last modified: Tuesday, July 23, 2019