Background to Concessional Super Contributions

Concessional superannuation contributions (CC) include:

• Employer contributions (including contributions made under a salary sacrifice arrangement)
• Personal contributions claimed as a tax deduction

If a Taxpayer has more than one superannuation fund, all CC made to all complying funds are added together and counted towards the CC cap.

From the 2018 FY onwards, individuals of all ages have access to a $25,000 CC cap.

Carry Forward CC Cap

The ‘Carry Forward Rule’ was announced on 3 May 2016 as part of the Government’s Superannuation Reform Package in the 2016-17 Federal Budget.  The measure is contained in Schedule 6 to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 which was enacted on 29 November 2016 with date of effect – 1 July 2018.  However, due to the design of the measure, any unused cap can only be used from the 2019-20 FY.

Operation

The Carry Forward Rule allows individuals to make additional CC in a financial year by utilising unused CC cap amounts from up to five previous financial years, providing their total superannuation balance just before the start of that financial year was than $500,000.

Effectively, this means an individual can make up to $150,000 (Unused CC = $25,000 x 5 = $125,000 PLUS $25,000 cap in 6^th year) in a single financial year.

Example

In the 2018/19 FY, Layla’s employer made concessional superannuation guarantee (SG) contributions of $10,000 on her behalf to her superannuation fund.  Layla did not make any deductible personal contributions to her fund.

The CC cap for the 2018-19 FY is $25,000.  Layla’s unused CC cap amount for the 2018-19 FY is therefore $15,000.  Therefore, her unused CC caps are as follows:

	2018/19	2019/20	2020/21	2021/22	2022/23	2023/24
Conc. Contributions	$10,000	$10,000	$10,000	$10,000	$10,000	40,000
Available Unused Cap	$15,000	$15,000	$15,000	$15,000	$15,000	–
Cumulative Available Unused Cap	$15,000	$30,000	$45,000	$60,000	$75,000	$60,000

Note

To claim a deduction for your concessional contributions you need to provide a Notice of Intent to Claim a Deduction to your super fund and have acknowledgement of receipt by the super fund before lodging your tax return.

For the current 2019/20 financial year, it is only the unused concessional contributions from the 2018/19 financial year that is relevant. Any unused amounts from prior years are lost.

This is a complex area. If you have any queries please speak with one of the experienced Accountants at Patrick Rowan & Associates tel: 5221 7655