Catch-Up On Your Super And Lower Your Tax

Did you know that under current legislation, super fund members may be able to contribute more than the standard concessional contribution cap ?

This is known as the carry-forward concessional contribution rule (also known as the catch-up concessional rule). Under this rule, super fund members may be able to ‘top-up’ their super with unused amounts of their concessional contribution cap from previous years.

How does the carry-forward concessional contribution rule work?

To take advantage of the carry-forward concessional contribution rule, a super fund member must:

• have a superannuation balance less than $500,000 at 30 June; and
• make a concessional contribution that exceeds the concessional contribution cap in that year.

If you meet this requirement, you can carry-forward – for up to five financial years – any concessional contribution which has accrued since 2018/2019.This approach is subject to your total superannuation balance (TSB), and you must  make a concessional contribution in excess of your standard annual concessional contribution cap.

Unused concessional contributions can only be carried forward for the next five years. After the five-year period, unused amounts expire.

Make sure you get advice

This is the general rule for any contributions that you are considering making to your super fund.  Ensure that you confirm with your fund or advisor that you are eligible to take advantage of the carry-forward concessional contribution rule, and that you aren’t at risk of breaching any other contribution rules.

If you exceed your annual concessional cap in a particular financial year, the ATO will automatically adjust your concessional contribution cap by applying any unused cap amounts. Unused amounts from prior years are used in the order of oldest to most recent.

When should you take advantage of the carry-forward concessional contribution rules?

This approach may be best suited to super fund members who have a super fund balance less than $500,000, particularly those who fall into one (or more) of the following scenarios:

• You have a large taxable income
• You have surplus income in the current financial year
• You have recently sold an asset, and have capital gains
• You have met preservation age, and are undertaking a transition to retirement strategy

Before considering making contributions to your super, it is highly recommended that you seek financial advice from a qualified advisor.

Want to know more about how Bentleys can help you?

Make a time for a chat with us today. We’re here to help you get where you want to be.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.

General advice warning

The information on this website and in the articles provided are general information only and do not take into account your personal objectives, financial situation, or needs. It should not be relied on as legal or taxation advice, and it does not take the place of this type of advice. You should also read the relevant Product Disclosure Statement and Financial Services Guide before making any financial decisions.

You should consider the appropriateness of the information in light of your own objectives, financial situation, or needs before acting on it by reading a copy of the Product Disclosure Statement (PDS) and, where necessary, seek professional financial advice tailored to your personal circumstances.