From the 01 July 2018 you will be allowed to make “catch up” concessional contributions.
If you have a superannuation balance of less than $500,000, you will have the ability to carry forward your unused concessional cap for up to five years!
The first year in which you can access unused concessional contributions is the 2019-20 financial year.
This will be useful if you:
- Have a large capital gain in one year, that pushes you into the next tax bracket
- Are getting close to retirement and you need to increase your superannuation balance
- Have taken maternity leave and are starting work again, and need the tax deduction and the ability to increase your superannuation balance
- Have a SMSF and needs more cash to make a capital purchase
How Does it Work?
Here is an example of how it works. Cassandra is a 63 year old retiree and has a superannuation balance of $200,000. She did not make any concessional superannuation contributions in 2018–19. In 2019–20 she sells an investment property and makes a $160,000 capital gain. She makes no other income, so her taxable income would be $80,000. As she has made no contributions in 2018-19, Cassandra now has the ability to contribute $50,000 in concessional (before-tax) contributions into her superannuation ($25,000 under the annual concessional cap and $25,000 from her unused 2018–19 concessional cap which she can carry forward). Therefore reducing her taxable income to $30,000 (and a tax saving of $9,250).
If any of the above affect you and your need assistance or you have any questions on the changes please feel free to contact Melanie or Renee.
General Advice Warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.