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 of $27,500 per annum?

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 (currently $27,500).

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. So, for the current financial year (2021/22), you can only top-up with unused amounts from 2018/19 financial year onwards. 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

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