Superannuation Contributions – Carry It Forward

As the end of the financial year is fast approaching, it is important you understand and consider the unused concessional contributions carry forward provision. It might be a mouthful to say, but the provision is potentially powerful.

The financial uncertainty created by COVID has meant that many people may not have maximised their concessional superannuation contributions in the current and prior financial years. Previously, there existed a ‘use it or lose it’ situation, where any unused concessional contributions were forfeited. 

This all changed on the first of July 2018. At this time the government introduced new rules that allow eligible superannuation fund members (subject to meeting the eligibility criteria) to utilise their unused concessional contributions limit on a rolling basis for 5 years. 

The Eligibility Criteria

  1. Members’ Total Superannuation Balance must be less than $500,000 on 30 June of the previous financial year. (For the 2021 financial year it is the balance on 30 June 2020).
  2. Members must have unused concessional contributions for 2018/19 and/or 2019/20.
  3. Members must be aged 75 or under,  and satisfy the work test at the time the contribution is made.

Additional Contributions

Assuming you meet the eligibility criteria for the year ended 30 June 2021, unused concessional contributions from 2018/19 and/or 2019/20 can be contributed. Any eligible concessional contributions made by a member are tax deductible.

An Example of Carrying Forward Concessional Contributions

John only receives concessional contributions from his employer. For the year ended 30 June 2019 he received $10,000 and for the year ended 30 June 2020 he received $11,000. With the current year cap of $25,000 (plus the unused concessional contributions from the previous two years), in John’s case there are unused concessional contributions of $15,000 (30/06/19) and $14,000 (30/06/20). And the maximum concessional contribution that can be made in the year ended 30 June 2021 is $54,000. If John receives $12,000 of concessional contributions from his employer for the year ended 30 June 2021, John would be eligible to make an additional concessional contribution of $42,000 ($54,000 less $12,000).

There are many factors to consider when deciding on whether to utilise the carry forward concessional contribution provisions. We recommend you speak to your local Accru advisor if you are considering doing so.

About the Author
Martin Rush , Accru Perth
Martin’s hands-on approach to understanding his clients’ needs enables him to find the best possible solutions for them. His approach builds trust and has enabled him to forge many long-term relationships over his 20-year career. Martin Rush joined Accru Page Kirk & Jennings in 1993 after completing his Bachelor of Business degree.
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