Carry-forward superannuation contributions

Matt Richardson

The 2019-20 financial year is the first year you may be able to contribute “unused” concessional contributions from a prior year.

Any unused concessional contributions (annual limit currently $25,000) from the 2018/19 financial year and onwards can be used on a rolling basis for up to 5 years!  Any amount not used after 5 years “expires”.

Concessional contributions include:

  • Employer contributions (including contributions made under a salary sacrifice arrangement); and
  • Personal contributions which have been claimed as a tax deduction.

Eligibility Requirements – check your Total Super Balance (TSB)  ***

To take advantage of these rules your Total Super Balance must be under $500,000.  This is the accumulated value of all superannuation accounts in your name as at the most recent 30 June.

If you wish to make a carry forward contribution in the 2019/20 financial year your TSB will be measured as at 30 June 2019.  *** It is critical you check your TSB prior to making a contribution under this measure.

Example 1

Miss B has $200,000 in her super account as at 30 June 2019.  During the 2018/19 year she took time off work to care for her child, so there were no concessional contributions made on her behalf during the 2018/19 year.

Miss B is eligible to contribute $50,000 in concessional contributions in the 2019/20 year.

This would suit Miss B’s circumstances if in the 2019/20 year she has a high taxable income such as a share in business income, a large trust distribution, a significant taxable capital gain or investment income.

Example 2

Mr D has $370,000 in his super account.  During the 2018/19 year the total concessional contributions made to his account was $10,000.

Mr D is eligible to have $40,000 in concessional contributions made to his super account during the 2019/20 year.  This is comprised of $15,000 unused from 2018/19 plus $25,000 for the 2019/20 year.

Opportunities – who can benefit?

The original purpose of the legislation was to assist taxpayers with non-standard or interrupted work patterns as a means to boost their retirement savings.  Those that take leave without pay, work part time, or who have “lumpy” income patterns will be ones that benefit the most.

However, there are also opportunities in years where higher than normal taxable incomes are derived (due to unexpected seasonal income, large realised capital gains, etc) where unused concessional contributions can assist with not only minimising your tax burden, but also ensuring you are saving for your retirement.

If you have any queries on how this works, contact the accounting team at Green Taylor Partners.