Concessional contributions carry forward
From 1 July 2018, if a member has a total superannuation balance of less than $500,000 on 30 June of the previous financial year, the member is entitled to contribute more than the general concessional contributions cap and make additional concessional contributions for any unused amounts. Only unused amounts accrued from the 2018-19 financial year onwards can be carried forward.
A member's "unused concessional contribution cap" for a financial year is the amount by which their concessional contributions for the year falls short of their concessional contributions cap for the year, under s 292-20(6) ITAA97.
A member's concessional contribution cap cannot be increased by more than the amount by which they would otherwise exceed the concessional contributions cap. Hence, only the exact amount of unused concessional contributions cap that is necessary is used, and any remaining unapplied unused concessional contribution cap is preserved to be carried forward for another year.
Eligibility to access unused concessional contributions
A member's total superannuation balance can affect their eligibility to make additional concessional contributions above the annual cap by accessing their unused cap accrued from previous financial years. If a member's total superannuation balance is greater than $500,000, the unused cap can still be accumulated up to five years and used later when the balance falls below $500,000.
The first year a member is entitled to carry forward unused amounts is the 2019-20 financial year. Unused amounts are available for a maximum of five years, and after this period will expire.
This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.
Last modified: Monday, November 23, 2020