Search
Close this search box.
Ivan Fletcher

Last Chance for Catchup Contributions from 2019

Written by Ivan Fletcher

There are some specific circumstances that are unique to this financial year that pose some potential strategies for consideration for the right set of circumstances  due to the changes in tax rates and Contributions Caps effective next year (as reported in last months Hudson Report).    However there is one Specific Strategy that will no longer be available if not utilised this year.

The opportunity to catch up on unutilised superannuation Concessional contributions from the 2019 financial year expires on 30 June 2024.  Eligible individuals (refer Criteria below) should consider and plan for this opportunity now before it is lost forever.

Refresher on What are – Catch up or Carry Forward Concessional Contributions

Legislation Commenced 5 years ago that allowed any unused Concessional Contributions from the year ended 30 June 2019 or any subsequent year to be carried forward and utilised in another year but with a limitation of 5 years in which to apply the unused CAP.

Concessional Contributions – include any pre tax Employer Contributions (SG) as well as salary sacrifice or any personal Contributions you have made and claimed as a persona tax deduction by lodging  Notice of Intent with your super Fund.

CALCULATING – UNUSED CONCESSIONAL CONTRIBUTIONS

The amount of unused concessional contributions cap is the difference between the individual’s concessional contributions in a year and the concessional contributions CAP for that year.

The following Table demonstrates how the Unused Cap is Calculated and Carried Forward

Example
Cap Received C/F Unused Cumulative
18/19 $25,000 $15,000 $10,000 $10,000
19/20 $25,000 $16,000 $9,000 $19,000
20/21 $25,000 $17,000 $8,000 $27,000
21/22 $27,500 $18,000 $9,500 $36,500
22/23 $27,500 $20,000 $7,500 $44,000
5 yrs total $130,000 $86,000 $44,000

In the year 2019 there is an unused CAP of $10,000.  Every year for the last 5 years, the CAP has remained unused to varying amounts with a total of $44,000  now currently available as the Carried  Forward (or Unused) CAP which is now available to be used this year ending 30/6/24.

So What Exactly is Expiring this Year ?

This financial Year ending 30 June 2024  will be the last opportunity to utilise the Carry Forward (Catchup) contribution of $10,000  (in this example) from the 18/19  financial year before the opportunity  is gone forever.   This will now continue to become an ongoing consideration every year.  For example in the 2024/25  it will be the last chance to utilise any carry forward contributions from the 2019/20  year.

How Do I find out my Current Unused CAP ?

You do need to be aware of your contributions history – which you can retrieve from your Super fund(s) directly.  However the best source is the ATO itself which you can access via your Mygov login if you have an active account or via the ATO Super hotline Ph: 131020.

If utilising MyGov

  • Check linked services and add ATO if it is not yet linked
  • Once in the ATO link – click on  “Super”  “information”
  • Choose menu option “Concessional Contributions” whereby you can then track the history of Concessional Contributions totals and carry forward amounts for each individual year.
  • You can double check your Cumulative result under the menu option “Carry Forward Concessional Contributions” as at 30/6/23 (in the above example you would expect to see  $44,000 as the Cumulative Carry forward amount as at 30/6/23.

So how do I go about utilising the unused CAP specifically for the 18/19 year ?

The following Table demonstrates (by example) how the Unused Cap is Utilised

Example
Cap Received C/F Unused Cumulative
18/19 $25,000 $15,000 $10,000 $10,000
19/20 $25,000 $16,000 $9,000 $19,000
20/21 $25,000 $17,000 $8,000 $27,000
21/22 $27,500 $18,000 $9,500 $36,500
22/23 $27,500 $20,000 $7,500 $44,000
5 yrs total $130,000 $86,000 $44,000
       
23/24 $27,500 $21,000 $6,500
       
Additional Contributions Required $16,500
  1. You must first fully utilise the Concessional Cap of the current year 23/24 which is $27,500.
    Assuming Contributions for this year total $21,000 (form your existing SG & sacrifice strategy)  you would still be $6,500 short of this years CAP.  To gain access to the 18/19 CAP you would first need to contribute an additional $6,500 this year.
  2. Once you exceed this years CAP any additional contributions will then be applied to the oldest (up to 5 years) of your carry forward contributions.  In this case  $16,500 in additional Contributions $6,500 (for the current year 23/24) and $10,000 (for the 18/19 year) would be required to utilise the carry forward contributions of the 18/19 year.

Caution – If you have exceeded the annual CAP in any of the last 4 years ending June 2020 2021 2022 or 2023, then your carried forward / unused CAP for 2019  may have already been utilised in part or in full.  It is important that you have a full awareness of the full contribution history of this year and the previous 5 years (as per the above table).

STRATEGIC CONSIDERATIONS FOR APPLICATION OF THIS  STRATEGY

· Inconsistent income years.  If you have a low income year followed by a high income year due ( eg’s leave with out pay, taking LSL on half pay,  or substantial periods of unemployment or in the year of a large Bonus or Trust distribution).
·  Abnormally Large taxable income years in the future such as a significant work Bonus, or a Capital Gains Event (from the sale of shares, property or business).

DISCLAIMER 

THE CRITERIA TO QUALIFY

To be eligible for this strategy you must first satisfy the multiple Criteria for this Strategy

Criteria 1 – Total Superannuation Balance (TSB) Less Than $500,000

To be eligible to make catch-up concessional contributions in any year you must have a ‘Total Super Balance’ of less than $500,000 as at 30 June at the end of the financial year immediately preceding the financial year in which the contribution is to be made.  This information can also be sourced form the ATO via your MyGov link or the ATO Super hotline 131020.

Year by Year – It is important to note that it’s only a member’s TSB immediately before the start of the relevant financial year that is relevant. This means an individual who may be ineligible one year due to their TSB exceeding $500,000, may subsequently qualify in a future year if their TSB subsequently falls below $500,000. This could occur as a result of negative market movements or benefit payments where a member has satisfied a condition of release and withdrawn funds from Super or Pension.

Criteria 2 – You must  qualify to make a voluntary contribution ?

You may qualify to make a voluntary contribution to super via one of the following conditions at the time the contribution is made :

·        Under age 67

·        Between age 67 and 74 and have already satisfied the Work Test (40 hours in 30 days)

·        Between age 67 and 74 and qualify for the Work Test Exemption

Work test exemption – Explained

 

·        You meet the work test in the previous financial year, AND

·        Your total superannuation balance (across all your super and/or pension accounts) is less than $300,000 (as of 1 July in the year of contribution) AND

·        The work test exemption has not been used in a previous financial year.

Criteria 3 –  Taxable Income is Significant Enough to Warrant Tax Deductions

You will need to have a strong awareness of what your current Taxable Income is projected to be.
If you are already below the tax free threshold for example and do not pay any tax, there is no point chasing Concessional Contributions that will bring you Nil tax savings and instead cost your 15% contributions tax (applicable to all Concessional Contributions).

In comparison if you have projected taxable income of $100,000 this year you are well entrenched in the 34.5% tax bracket (inclusive of Medicare Levy) so reducing tax applied at 34.5% to instead pay 15% contributions tax would be a significant tax saving.

Book a FREE 15 minute meeting

Plant a tree with us today, to sit in the shade in the future.

More From Hudson Financial

The Common Financial Challenges of Generation Z

When it comes to finances, Generation Z faces a unique set of challenges. This group, born between the mid-1990s and early 2010s, is known for...

Silent Generation

As members of the Silent Generation, you have witnessed monumental societal changes and endured significant challenges throughout your lives. Born between 1928 and 1945, you...

Best Financial Advisor Brisbane

At Hudson Financial Planning, we pride ourselves on being your trusted partner in achieving your financial goals. With our self-license and commitment to personalised service,...
Scroll to Top