From the 1st July 2018 an individual with a Total Superannuation Balance of less than $500,000 can carry forward any unused concessional contribution cap of up to $25,000 per annum for up to 5 years.

This is referred to the “Unused concessional cap carry forward”. 

In order to determine if your Total Superannuation Balance is less than $500,000 you refer to your balance at the 30th June  of prior year, if your balance at less than $500,000, you can utilise the cap carry forward rule.

This is best demonstrated with an example:

example
Source:  https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=3

The 2019-20 is the first year it can be utilised.

How could this apply to me?

Salary $100,000 p.a.

Should the tax payer make an additional concessional contribution in the 2020 year of $31,000,

The estimated tax saving is as follows:

 

2019

2020

2020 - After applying 'cap carry forward' rule

Salary

$  100,000

$  100,000

$  100,000

SGC @ 9.50%

$      9,500

$      9,500

$      9,500

Additional Concessional Contributions

Nil

Nil

$    31,000

Unused Concessional Contributions Cap

$    15,500

$    15,500

nil

Taxable Income

$  100,000

$  100,000

$    69,000

Tax on Taxable Income

$    26,632

$    26,632

$    15,352

Tax Saving

 

 

$    11,280

 

It is important to note that:

concessional contribution include all of the followings,

Employer Mandated Contribution (9.5% Super guarantee)

Employer Non-Mandated Contribution (Salary Sacrifice)

Member Concessional Contribution

The work test will still apply if you are over the age of 65 at the time of making a contribution. That is you must work at least 40 hours during a consecutive 30-day period each financial year in order for your fund to accept a personal super contribution for which you can claim a deduction.

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