Super Opportunity - catch up concessional contributions from July 2018

Any Australian considering making super contributions since 1 July 2017 needs to be mindful that the annual concessional (before-tax) contributions cap is much lower than previous financial years. Since July 2017, the annual concessional contributions cap has dropped to $25,000, which is a lot lower than concessional caps in place for the 2016/2017 year.

The annual before-tax contributions cap is now a single annual cap for all ages, and that concessional cap is $25,000. From 1 July 2018, the government  will allow catch-up concessional contributions for those Australians who have a Total Superannuation Balance of less than $500,000.

From 1 July 2018, if your Total Superannuation Balance (includes all balances, if you have more than one super account) is less than $500,000 at the end of a financial year, then you will have the opportunity to utilise the unused portions of your concessional caps from previous years (up to 5 years’ worth) in the following financial year, or future years.

Important: The unused cap amounts can start to be carried forward from 1 July 2018, that is, from the start of the 2018/2019 financial year, which means the 2019/2020 year is the first financial year that individuals can take advantage of unused cap amounts from previous financial years.

At the risk of repeating information, the key messages you can take from the new catch-up concessional contributions rules are as follows:

• Since 1 July 2017, the annual concessional contributions cap has dropped to $25,000.
• From 1 July 2018, an individual can start to carry forward unused concessional cap amounts
• From 1 July 2019, an individual can play catch-up concessional contributions (using unused portions of the annual concessional caps from one or more of the previous 5 years), provided the individual has a Total Superannuation Balance of less than $500,000 in super, just before the start of the financial year. Note that an individual can only start carrying forward unused cap amounts from 1 July 2018.