Retirement may be a distant thought or a worrying reminder. However, it is never too early or too late to top up your super fund for the provision of a better future. From 1 July 2018 you may be eligible to top your concessional (tax deductible) super contributions under the new carry forward rule. If you have a total superannuation balance of less than $500,000 on 30 June in the prior financial year, you are now entitled to contribute more than the usual $25,000 concessional contributions cap to catch up on prior unused caps – i.e. where you didn’t contribute and claim a tax deduction for the full $25,000 in a prior year. Concessional contributions include those made by your employer under the super guarantee system, contributions made as part of a salary sacrifice, or personal contributions where you are entitled to claim a tax deduction.
The first year that you are entitled to top up by the unused amounts is the 2019-20 financial year. The unused amounts are available for a maximum of five years and after this the unused caps will expire.
Refer to the table below for an example of when the unused concessional carry forward cap is applicable.
|General contributions cap||$25,000||$25,000||$25,000||$25,000||$25,000|
|Total unused available cap accrued||Not Applicable||$0||$22,000||$44,000||$69,000|
|Maximum cap available||$25,000||$25,000||$47,000||$25,000||$94,000|
|Superannuation balance 30 June prior year||Not Applicable||$480,000||$490,000||$505,000||$490,000|
|Unused concessional cap amount accrued in the relevant financial year||$0||$22,000||$22,000||$25,000||$25,000|
Pro tip: are you wanting to increase your super fund balance, but you are unable to use the concessional carry forward cap? You will still be entitled to the non-concessional bring forward rule. This may allow you to increase your contributions to $300,000 for one year providing the balance is less than $1.4 Million.
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Author: Lachlan Hunn