Currently the maximum amount you can contribute to superannuation in a financial year is capped at $25,000. This is known as the ‘concessional contributions cap’ and is includes personal and employer contributions. A new provision has been legislated where from 1 July 2018 if you don’t contribute up to the concessional contributions cap amount in a financial year, you can carry forward the shortfall to contribute in up to the next five financial years, on top of the $25,000 cap for each of those years. For example, you might only have $7,000 of contributions made in the 2018-19 financial year, so you could carry forward $18,000 to be contributed in the next financial year – making your total contributions cap for the 2019-20 financial year $43,000.

The benefit in this is that if you do have funds available (e.g. after sale of an asset), you can contribute a lump sum to superannuation and so reduce your taxable income. Previously you might have been prevented from doing this because of the annual contribution cap not being able to be carried forward.

To be eligible, you must have a total superannuation balance of under $500,000 as at 30 June of the year before you utilise the carried forward amount.

If this is or becomes an area of interest please call our office on 03 5339 3200 or contact us here to discuss eligibility and what contribution amount you would need to make for this to be worthwhile.

Thanks for reading.

By Genna Kidd
 

Focus Accounting and Financial Group Pty Ltd is a Corporate Authorised Representative (No. 1254675) of Merit Wealth Pty Ltd (AFSL No. 409361).

The information contained on this website has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial advisor to consider whether that is appropriate having regard to your own objectives, financial situation and needs.