Got less than $500,000 in Super?

Got less than $500,000 in Super?

Catch up on pre-tax Super contributions from 1 July 2018

You can’t make more than $25,000 in pre-tax or concessional contributions per financial year. But what if you don’t need to contribute that much?

What if you only have $5,000 worth of contributions?  What happens to the remaining $20,000?

Previously, this unused contribution cap space simply expired at the end of the financial year.

For people with less than $500,000 in super, this is no longer the case. As of 1 July 2018, unused contribution cap space can be carried forward to be used in future financial years.


Mary’s Story

Consider Mary’s situation. During the current financial year, Mary receives $6,300 of Super guarantee contributions from her employer. She also decides to salary sacrifice $1,000 a month, and so makes $18,300 of concessional contributions for the year. As the concessional contributions cap is $25,000, Mary hasn’t fully used her cap. She could have contributed another $6,700.

In the next financial year, Mary’s base concessional contributions cap is still $25,000. However, to determine her personal cap, the unused amount from the prior year ($6,700) is included. As such, her maximum concessional contribution for the 2020 financial year is $31,700.  If Mary makes the same contributions for the 2019/2020 she will be able to make contributions up to $38,400.

This comes in handy, as Mary sold her investment property and has quite a big capital gain. She decides to double her salary sacrifice to $24,000, and her employer contributions remain the same at $6,300. Her total concessional contributions add up to be $30,300, which would have caused her to exceed her cap if she hadn’t been able to carry-forward the prior years unused space.

Concessional Contributions Table

Unused cap space begins to accrue from the financial year 1 July 2018 to 30 June 2019 and can be carried forward for a maximum of five financial years, after which any unused amounts expire.