How we got here

On 3 May 2016 the Government’s Superannuation Reform Package was announced in the 2016-17 Federal Budget. This measure was contained in Schedule 6 of the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 (‘the Act’) was enacted on 29 November 2016 and then took effect on 1 July 2018. Due to the design of the measure, any unused cap could only be used from the 2019-20 financial year.

If you are thinking of boosting your retirement savings, making carry-forward contributions could be an easy opportunity to boost your balance. If eligible an individual could make up to $150,000 of concessional contributions in a single financial year by utilising their unused concessional contribution cap from the previous five financial years. years.

 

What are carry-forward contributions?

Carry-forward contributions are a rule that allows super fund members to use any of their unused concessional contributions cap (or limit) on a rolling basis for five years.

Meaning if you do not use the full amount of your concessional contribution cap ($25,000 in 2019/20 and 2020/21), you will be able to carry forward the unused amount and take advantage of it up to five years later. The unused amounts expire at the end of five years.

 

Expiry of unused concessional contributions caps

Will you benefit from carry-forward contributions?

Carry-forward contributions assist individuals with interrupted or non-standard work patterns such as individuals who take time out of work, work part time, have ‘lumpy’ or irregular income and periods when they make no or limited super contributions. This includes women (or men) who work part time or take time off to care for children or other family members.

 

What are the eligibility rules?

When making a carry-forward contribution, your Total Super Balance (TSB) must be under $500,00 at 30 June in the previous financial year. This is calculated by adding all amounts held in the accumulation phase of super, plus the retirement phase and any additional rollovers in transit between super funds at 30 June.

 

If your TSB falls below $500,000 at a later date you will become eligible to apply any of the unused concessional contributions cap in a future financial year.

 

How to obtain your carry-forward amount

  • Contact your super fund/s for a current valuation of your super accounts
  • Check the latest reported balance for all your super accounts with the ATO. This is available via MyGov
  • Ensure your TSB is under $500,000
  • Check your concessional contributions for previous years and compare this with the concessional carry forward from your unused concessional cap

 

If you would like assistance finding out your TSB please do not hesitate to contact our office and we will assist you through the process.

 

Important to note:

  • The first financial year you could access the unused concessional contribution cap was 2019/20
  • Only unused concessional contribution cap amounts from 1 July 2018 onwards can be carried forward.
  • Keep track of how much you have made in concessional contributions each year. If you contribute more than allowed under the rules, the excess amounts will be taxed at your marginal (or top) tax rate.

The rules permitting carry-forward concessional contributions have no relation to the bring-forward rules, which allow you to make larger non-concessional (after-tax) contributions into your super over a three-year period.