Carry Forward Unused Concessional Contribution Cap

So, how do the catch-up provisions for unused Concessional Contributions work? And how can these unused Concessional Contributions be carried-forward?

This article will explain the conditions that need to be met so that an individual can utilise the Concessional Contribution catch-up rules without exceeding the Concessional Contribution cap.

The Concessional Contribution catch-up rules were initially announced by the Government on 15 September 2016 and will take affect from 1 July 2018.

The legislation supporting the carry-forward of the unused Concessional Contribution cap rules received Royal Assent on the 29th of November 2016.

Here is a link to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016.

So, let’s get into what the rules mean and how they are applied.
 

How to Manage Your Super Without Paying a Financial Adviser

Download our 6-step checklist & take control of your super

Carry Forward and Catch Up of Unused Concessional Contribution Cap

 
From 1 July 2018, individuals with superannuation balances below $500,000 will be able to carry forward any unused portion of their Concessional Contribution cap for up to 5 years (rolling period). This catch-up provision therefore can be first utilised from 1 July 2019 (the financial year after the first year of being able to accumulate unused Concessional Contributions).

Any carried forward amounts that are not used within 5 years will expire and be forfeited.
 

What is the Concessional Contribution Cap?

 
The superannuation Concessional Contribution cap is currently $25,000 p.a. (financial year). This amount is intended to be indexed in line with Average Weekly Ordinary Time Earnings (AWOTE) in increments of $2,500 (rounded down).
 

What are Concessional Contributions?

 
A Concessional Contribution is a contribution received into a superannuation account where the contributor claimed a tax deduction. This includes self-employed contributions, mandatory superannuation guarantee (SG) contributions, salary sacrifice contributions and personal deductible contributions.

Related Posts:

 

Example of Carry Forward Unused Concessional Contribution Cap

 
Let’s assume a person with a superannuation balance of less than $500,000 contributes $20,000 as a Concessional Contribution in the financial year commencing 1 July 2018 and then contributes $15,000 into superannuation as a Concessional Contributions in the financial year commencing 1 July 2019.

Have You Read My Other Posts Yet?

Assuming that the cap is still $25,000 (i.e. no indexation), this person will be able to carry forward $5,000 of their unused Concessional Contribution cap from the 2018/19 financial year and use it at any stage until the end of the 2023/24 financial year. Further, they can carry forward $10,000 of their unused Concessional Contribution cap from the 2019/20 financial year and use it at any stage until the end of the 2024/25 financial year under the catch-up provisions.

This is shown in the table below:

Year 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24
General Concessional Contribution Cap 25 000 25 000 25 000 25 000 25 000 25 000
Revised Cap Incl. Unused Cap 25 000 30 000 40 000 37 000 30 000 25 000
Actual Concessional Contribution 20 000 15 000 28 000 32 000 30 000 25 000

 

How Are Unused Concessional Contributions Applied?

 
In practice, an individual’s Concessional Contribution Cap in any given year is increased (on top of the standard Concessional Contribution cap) by any unused portion of the cap from the previous 5 financial years, but reduced by any use of the those unused portions during that period. Therefore Concessional Contributions above the general cap can be made without it creating Excess Concessional Contributions.
 

When Does The $500,000 Balance Rule Apply?

 
An individual’s superannuation balance at the beginning of the financial year determines whether they are able to use the Concessional Contribution catch up provisions. For example, if their balance on 1 July 2021 (in the example above) was $510,000, their Concessional Contribution cap would not be inflated to $37,000 as a result of unused carried-forward Concessional Contributions. Instead, it would remain at the standard $25,000, due to that person’s superannuation balance exceeding $500,000.

Carry-Forward-Unused-Concessional-Contribution-Cap-Catch-Up

Hypothetically, if that same person’s superannuation balance fell to below $500,000 by 1 July 2022, my interpretation of the rule would suggest that any unused amount of the carried forward Concessional Contribution cap could once again be utilised.

Click here to read from the Federal Register of Legislation – See schedule 6 Subsection 291-20.

Chris Strano

Chris Strano created SuperGuy to help the average punter navigate through the complex and ever-changing super rules. It has since become one of Australia's leading digital super resources. If you’re looking for more personalised advice, have a chat with one of our experts at www.superguy.com.au/need-advice

More Posts

Follow Me:
FacebookYouTube

Previous

Next

10 Comments

    • Chris Strano

      Hi Esther, the carry forward rule applies to members of all super funds, not just SMSF.
      The same rules apply. Sometimes the ATO writes content specific to members of SMSFs, so it is always best to double check.

      Reply
  1. Jason

    Hi Chris, can you carry forward the concessional contributions if you are over 65 and still working?

    Reply
    • Chris Strano

      Hi Jayson, yes, the conditions for utilising the unused concessional contribution cap are that the individual has a superannuation balance below $500,000 and, if over age 65, meets the superannuation work test in the year the contribution is made and prior to the contribution being made.
      Related Posts
      What is the Superannuation Work Test?

      Reply
  2. Ben

    So if I have put nothing in 2018 or 19 I can then put 50k at once? Does that mean that I will get a tax concession for the entire 50k?

    Reply
    • Chris Strano

      Hi Ben, this is correct. Provided your super balance is lower than $500,000 at the end of 30 June 2019. Any unused amount can be carried forward for up to 5 years. Be mindful though, employer contributions will count towards your concessional contribution cap. Read more here.
      Related Posts:
      What is a Concessional Contribution

      Reply
  3. Alex

    Hi Chris

    Thanks for the article! Quick question for you. I started working in Australia for tax years 17/18, left for Singapore but will be returning to Australia around July 2021. Is it possible to top up the two years I’ve been overseas upon my return do you know?

    Regards
    Alex

    Reply
    • Chris Strano

      Hi Alex, great question. I can’t find anything that specifically relates to this. I can’t see why you wouldn’t be able to utilise the carry forward of unused concessional contribution cap, despite working overseas, but that’s just a guess. Sorry!
      I’m going to keep looking into this. Let me know if you find a ruling.
      Thanks!
      Chris

      Reply
  4. Arthur

    Hi Chris, this is really great!

    Question, if I end up contributing over the cap, let say $5K over. Will it be taxed on a higher rate for the whole amount of $30K or just the $5K. As per my understanding, there is a fine as well.

    Thanks.

    Reply

Submit a Comment

Your email address will not be published. Required fields are marked *