As of 1 July 2019, new rules were introduced allowing eligible taxpayers to make tax deductible contributions for unused portions of their super concessional contributions caps from prior years. Effectively, a top up!
This brings tax deductions into the current financial year, which normally would be in excess of the normal annual concessional contribution cap of $27,500.
The new rules allow taxpayers to look back on each financial year commencing from 1 July 2018 to calculate the ‘unused’ portion of their concessional contributions cap in each financial year.
The ‘unused’ cap is effectively the difference between the concessional contribution cap for the financial year less the total of all before tax contributions made in that same financial year.
You may only claim unused super contributions from previous years if your total super balance is less than $500,000 at 30 June in the financial year before the year in which you make your ‘catch up’ contributions. Unused concessional cap amounts can only be carried forward for a maximum of five years.
Concessional superannuation contributions can be complex and implementing the right strategies is vital to ensure you maximise your superannuation savings. Get in touch with your advisor for assistance.