How do I know if I have carried forward concessional contributions to use this year?

Business accountants' hands gather around and piece together a puzzle of a light bulb on the table in the midst of a brainstorming session.

Clients frequently enquire about the possibility of making up for unutilised concessional contributions in previous years. Fortunately, this is achievable, and our team of expert accountants in Sydney can assist you in making the most of this opportunity. The feasibility of this option hinges on two factors: your concessional contribution record from 1 July 2018 onwards and whether your total super balance, as of 30 June of the preceding year, falls below $500,000.

How does it work?

Individuals can make additional concessional contributions by utilising their unused concessional contributions caps on a 5-year rolling basis, as long as their total super balance was less than $500,000 on 30 June, just before the start of that financial year.

The first year you can increase your concessional contributions cap by the amount of unused cap is 2019–20, but only if you have a total superannuation balance of less than $500,000 on 30 June 2019.

Concessional contributions include:

  • the 9.5% superannuation guarantee
  • salary sacrificed contributions; and
  • personal deductible contributions, which have satisfied s.290-170 ITAA 1997.

How much extra can I contribute?

For the financial year ending Unused caps from these financial years can be applied Maximum* concessional contributions cap with carry forward rule and including the actual year as well
2019-20 only 2018-19 $25,000 to $50,000
2020-21 only 2018-19 & 2019-20 $25,000 to $75,000
2021-22 only 2018-19 to 2020-21 $25,000 to $100,000
2022-23 only 2018-19 to 2021-22 $25,000 to $125,000
From 2023-24 only 2018-19 to 2022-23 $25,000 to $150,000

* This may differ if a contribution reserving strategy has been used in the previous or current year.

Any amounts carried forward but not used after 5 years will expire.

Case Study

Stephen is 39, and his employer made superannuation guarantees of $5,000 into his SMSF in 2018-19 as he’s been working part-time whilst being a ‘stay-at-home-Dad’. He didn’t make any personal concessional contributions to his fund.

The concessional contribution cap for the 2018-19 financial year was $25,000, so his unused contribution cap was $20,000.

Between 2018-19 and 2023-24 financial years, Stephen’s concessional contributions and available unused concessional contribution caps are below:

2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
Concessional contributions $5,000 $5,000 $5,000 $5,000 $5,000 $40,000
Available unused cap $20,000 $20,000 $20,000 $20,000 $20,000 $0
Cumulative available unused cap $20,000 $40,000 $60,000 $80,000 $100,000 $80,000

2023-24 financial year

On 30 June 2023, Stephen had a total superannuation balance of less than $500,000.

In the 2023-24 financial year, Stephen makes a personal concessional contribution of $35,000 in addition to his employer’s concessional superannuation guarantee contribution of $5,000 on his behalf.

Assuming the concessional contribution cap remains at $25,000 (for the financial years from 2018-19 to 2023-24), Stephen will have exceeded this cap by $15,000 ($40,000 less $25,000 cap). However, he can increase his concessional contribution cap in the 2023-24 financial year by using $15,000 of the $20,000 unused concessional contributions cap from the 2018-19 financial year, with the remaining $5,000 unused cap expiring in the 2023-24 financial year.

The above gives you an idea of how the carry-forward of concessional contributions works. If you have any questions about how it works or whether it is a good idea for your circumstances, please contact your client manager to clarify.

Kreston Stanley Williamson Team 

Correct as of 16 December 2020

Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

Read Other Articles

Pin It on Pinterest