At this time of year, we review all our clients super accounts and, for many, we assist with calculations for additional Concessional Contributions into Super (contributions for which the member can claim a personal tax deduction). The current cap is $25,000.

This year, for the first time, if you don’t use up your whole cap, most people can carry forward the remaining balance and put more in next year, or the year after. Your $25,000 cap will ‘carry forward’ for up to 5 years providing your total super balance is under a certain amount.

Here is the diagram from the ATO websitej, that shows the caps and examples of how contribution limits can be rolled forward:

The end result is that if you don’t have enough cash at the end of the year to make an additional contribution, you can still make the contribution next year without losing your 18/19 cap,

One of the key areas where this might benefit a client is if they plan to dispose of an investment property in the next 5 years and the capital gain will attract tax at a marginal tax rate higher than the individuals normal marginal tax rate. Saving up a couple of years of Contribution Caps and investing the sale proceeds within super may significantly reduce tax payable on the disposal and also boost tax effective super investment.