Carry-forward unused concessional contributions: Case study

(ATO)

 

From 2019–20, carry-forward rules allow you to make extra concessional contributions – above the general concessional contributions cap – without having to pay extra tax.

The carry-forward arrangements involve accessing unused concessional cap amounts from previous years. An unused cap amount occurs when the concessional contributions you made in a financial year were less than your general concessional contributions cap.

 

Example: Carry-forward concessional contributions (one year)

Anna’s concessional contribution cap for the 2019–20 year is $25,000. Concessional contributions during that year, including her employer’s SG payments, were $15,000. Anna’s total super balance for the previous financial year was $328,000.

In January 2021, she receives a company bonus of $10,000 which, as part of a valid salary sacrifice agreement is paid into her super. Anna knows that she also will earn more in 2020–21 and that her employer contributions and her other salary sacrifice contributions will add up to $25,000 (the general concessional contributions cap).

However, as Anna has $10,000 worth of unused concessional cap amounts from 2019–20 she will not exceed her cap for the 2020–21 year

 

To use your unused cap amounts you need to meet two conditions:

  • Your total super balance at the end of 30 June of the previous financial year is less than $500,000.
  • You made concessional contributions in the financial year that exceeded your general concessional contributions cap.

The amount of unused cap amounts you will be able to carry-forward will depend on the amount you have contributed in previous years, starting from 2018–19. You can use caps from up to five previous financial years.

The oldest available unused cap amounts are used first. For example, unused cap amounts from 2018–19 would be applied to increase your cap first before unused cap amounts from 2019–20.

Unused cap amounts are available for a maximum of five years and will expire after this. For example, a 2018–19 unused cap amount which is not used by the end of 2023–24 will expire.

If, after applying all your available unused cap amounts, you still have excess concessional contributions, you may need to pay extra tax.

Division 293 tax

For Division 293 tax purposes, we count your concessional contributions but not your excess concessional contributions.

If your concessional contributions cap has increased due to the use of unused cap amounts, and your combined income and concessional contributions are above the Division 293 threshold, you would have to pay, or pay a higher amount of, Division 293 tax.

How to view your carry-forward concessional contributions

You can view and manage your concessional contributions and carry-forward concessional contributions using ATO online services through myGov.

Log in to ATO online services, select Super, then navigate to Carry-forward concessional contributions.

Be aware that due to the reporting timeframes of funds, especially SMSFs, the latest information may not be available in ATO online services. You can contact your super fund for the most up-to-date information.

 

 

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