A new rule has been introduced by the Australian Taxation Office regarding your super contribution. If your superannuation fund balance is less than $500,000, and you have not used your $25,000 concessional super contribution in the financial year ended 2019, you can now carry forward this unpaid contribution to the current and future financial years. This allows you to minimise your tax liability whilst maximising your investments.

The new rule applies from 1 July 2018. This means that the financial year 2020 is the first year in which you can top-up your super contributions by the carry forward amount. In the financial year 2020, you can either choose to contribute or rollover any concessional superannuation shortfall ($25,000 – concessional contribution made) for the year 2019. If you choose to roll over, you are allowed to pay and receive benefits in any of the following 5 years (i.e. up to 2024 for the year 2019). Note: Superfund should receive your contribution on or before the 30th of June or it will not be considered for this financial year.

What are Concessional Contributions?

Concessional superannuation contributions are tax-deductible super contribution made to your super fund before tax. This includes compulsory employer superannuation guarantee contributions, additional employer before-tax super and salary sacrifice amounts and is capped at $25,000 per financial year. It may also include the personal contributions you make. For example, sole traders who contribute to their own super fund can claim a tax deduction for this on their income tax returns.

Tax Strategy 2019-2022: Rollover and claim Unused Concessional Superannuation shortfall (Example):

From 1st July 2018, you are allowed to make a concessional superannuation contribution of up to $25,000 per annum into your superfund. This saves you from major tax liability on your personal tax return and also increases your investments.

For example, If you or your employer has made a concessional super contribution of say $15,000 in the financial year 2019, and your super fund balance is less than $500,000, you can make an additional concessional super contribution of $10,000 in any of the financial year 2020 – 2024. It may provide substantial tax benefits depending on your marginal tax rates for the financial year-end.

Concessional Contributions Checklist:

• Check your superannuation balance as at 30 June 2019. Was it less than $500,000?
• What did you contribute to super in the 2019 financial year?
• What is the last date your super fund will accept payments? It will probably be at least a week before the end of the financial year.

Get advice before making extra superannuation contributions:

However, if you contribute over the super concessional threshold, you may end up with a huge tax bill. If you are keen to get the tax benefits for maximum contributions, talk to us now and we will help you with your tax minimisation strategy.

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