Plan now to take advantage of 5-year carry forward rule

About the concessional contributions cap

The concessional contributions cap is the maximum amount of before-tax contributions you can contribute to your super each year without contributions being subject to extra tax.

From 1 July 2021, the concessional contributions cap is $27,500.

From 1 July 2017 to 30 June 2021, the concessional contribution cap for each year was $25,000.

The cap increases in increments of $2,500 in line with the statistical measure of average weekly ordinary time earnings.

If you have unused cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years.

Keeping track of your concessional contributions

To ensure you stay under the concessional contribution cap:

• Be aware of your concessional contributions cap, including any unused contribution cap amounts from previous years.
• Be aware of your total super balance.
• Keep track of the contributions you, your employer(s) or others make on your behalf, particularly if you have more than one job or pay money into more than one super fund. Concessional contributions made to all your funds during a financial year are added together and counted towards your concessional contributions cap. You can track contributions that funds have reported to us on ATO online services.
• Check when your employer pays super guarantee and other contributions (including any provisions on timing if you have a salary sacrifice agreement), and when they were received by your super fund. Contributions count towards a cap in the year your super fund receives them.
• If you are a member of an unfunded defined benefit or constitutionally protected fund, be aware of how concessional contributions to these funds are treated.
• Check if your employer pays costs on your behalf to your fund, such as administration fees and insurance premiums. These amounts are included in your concessional contributions cap.
• If you are eligible to claim a tax deduction for your personal super contributions, the amount allowed as a deduction is included in your concessional contributions cap.

Be aware of payment and reporting timelines

• Your employer can make super guarantee contributions for the quarter ending on 30 June by 28 July in the next financial year. If you have a salary sacrifice contributions agreement with your employer, and you want your fund to receive them by 30 June, ensure your employer includes this in the agreement.

Your contributions information displayed in ATO online services is based on when your fund(s) report to us, and may not be up to date.

Self-managed super fund members

If you’re a member of a self-managed superannuation fund (SMSF), you may be able to make a concessional contribution in one financial year and have it count towards your concessional contributions cap in the following financial year — check with our SMSF team first »

If you’re at risk of exceeding the cap

If you think you may go over your concessional contributions cap in the current financial year:

• stop or reduce any before-tax voluntary contributions to your super
• delay making any personal super contributions you intend to claim as a deduction in your tax return.

If you have 2 or more employers and you think your employers’ compulsory super guarantee contributions will exceed your concessional contributions cap, you can apply to opt out of receiving super guarantee from one or more of your employers.

If your contributions for a financial year exceed or will exceed your contributions cap due to special circumstances, you can apply for some or all of your contributions to be disregarded or reallocated to another year.

Carry forward unused contribution cap amounts

If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years. You’re eligible to do this if you:

• have a total super balance of less than $500,000 at 30 June of the previous financial year
• have unused concessional contributions cap amounts from up to 5 previous years (but not before 2018–19).

The unused cap amounts you can carry forward depends on the amount you have contributed in previous years, starting from 2018–19. You can carry forward unused cap amounts from up to 5 previous financial years, including when you were not a member of a super fund.

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

Unused cap amounts are available for 5 years and expire after this. For example, a 2018–19 unused cap amount that is not used by the end of 2023–24 will expire.

Unused concessional cap amounts are applied automatically once you exceed the cap in any year.

If you still have made excess concessional contributions (ECC) after applying unused cap amounts, you may need to pay extra tax.

If you exceed your concessional contributions cap, the excess concessional contributions (ECC) are included in your assessable income.

ECC are taxed at your marginal tax rate less a 15% tax offset to account for the contributions tax already paid by your super fund. That is, the amount of tax on the excess amount is reduced by 15%.

To find out more or to discuss this superannuation topic, contact the award-winning team at Intuitive Super team in Toowoomba, Dalby or Chinchilla on 1300 856 064. Read more at https://carrickaland.com.au/smsf/.

Source: ATO