Carried Forward Concessional Contributions
Each financial year, an individual can contribute a maximum amount of concessional contributions into their superannuation.
Concessional contributions are usually seen as “pre-tax” contributions for the individual. The most common include:
- Superannuation Guarantee Contributions
- Salary Sacrifice Amounts
- Personal deductible contribution
Contributions Cap
In any one year, there is a restriction on how much money we can put into superannuation. These are known as the contributions cap. There is a concessional (pre-tax) cap and a non concessional (post-tax) cap.
Concessional Contributions Caps are as follows:
| Year | Amount |
| 2021/22 | $27,500 |
| 2020/21 | $25,000 |
| 2019/20 | $25, 000 |
| 2018/19 | $25,000 |
Carried Forward Concessional Contributions – What is it?
From 1 July 2018, if a person’s concessional contributions in an income year are less than the concessional contribution cap, they can “carry forward” the unused amount to the next year. The amount can be carried forward for up to 5 years.
By doing so an individual has up to 5 years to make sure they are utilising all their concessional contributions cap. They can do this long as their total superannuation balance is less than $500,00 at the beginning of the financial year.
Simple Example
- An individual had an income of $80,000 last financial year (20/21) therefore an SG rate of 9.5%.
- Their total SGC is $7,600. Assuming there is no other concessional contribution made, is it less than the $25,000 cap.
- They are able to carry forward $17,400 ($25,000 – $7,600) into this financial year. Effectively increasing this year’s concessional cap to $42,400 ($25,000 + $17,400)
Multiple Year Example
- An individual’s total SGC are $10,000 each year
- In 2020 the individual makes an additional personal deductible contribution of $17,000 from the sale of property.
- In 2022 the individual plans makes an addition personal deductible contribution of $40,000 from an inheritance.
| Year | 2018/19 | 2019/20 | 2020/21 | 2021/22 |
| Yearly Concessional Cap | $25,000 | $25,000 | $25,000 | $27,500 |
| Concessional Contributions | $10,000 | $27,000 | $10,000 | $50,000 |
| Available Unused Cap | $15,000 | ($2,000) | $15,000 | ($22,500) |
| Cumulative Unused Cap | $15,000 | $13,000 | $28,000 | $5,500 |
Don’t Miss Out
Superannuation continues to be the most tax effective way to fund your retirement.
Utilising your full cap is a great way to make sure you are getting as much into the superannuation environment as possible. It is nearly 5 years since the carried forward rules were introduced, so any non-used concessional cap from the first year is soon expiring.
If you would like to discuss the carried forward provisions and how it may assist your retirement planning, contact us for a No Obligation Discovery Meeting.
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