An exciting change to superannuation contributions which are relevant from 1 July 2019, are that eligible individuals may be able to make concessional contributions (CCs) above the annual cap, by utilising concessional cap amounts that were accrued and carried forward from 1 July 2018. This means individuals who did not have any CCs in the 2019 financial year may be able to make CCs of up to $50,000 in the 2019/20 year.
Similarly, if the concessional cap is not utilised in the current financial year, the unused portion of the cap can be carried forward and potentially used in future years. For example, if a client’s CCs were $15,000 in 2018-19, that client may contribute CCs of up to $35,000 in 2019-20, or in a following year up to and including 2023-24 provided their TSB is less than $500,000 just before the start year the contribution is made.
It is important to note that these amounts aren’t only carried over for the following financial year, the amounts are carried forward on a five year rolling basis. Unused amounts which have not been utilised within five years will expire.
To make use of carried forward CCs in the 2019/20 financial year, an individual’s Total Superannuation Balance (TSB) must not have exceeded $500,000 on 30 June 2019. This requirement will need to be met going forward on the 30 June prior to the year in which the person wishes to make the catch-up contribution.
The catch up arrangement may be beneficial including where an individual:
Hopefully the above gets your mind thinking about opportunities to use this strategy in your own financial plan and if you want to discuss any of the details above or the application to your situation then please contact me at email@example.com
Pete Pennicott | Principal Adviser
Wealth Collective trading as Pekada (ABN 95 624 612 684), corporate authorised representative (CAR), number 1263725, is authorised to provide financial services on behalf of Communitas Wealth Pty Ltd.
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