Carry-forward (catch-up) super contributions could be the answer for many Australians looking to boost the balance in their super account.
Catch up contributions are concessional (before tax) contributions made to your superfund.
From 1st July 2018, eligible individuals have been able to accumulate unused concessional contributions and carry them forward. From July 1, 2019, you can start making additional concessional contributions to cover those carried-forward amounts.
What are ‘carry-forward contributions’ or ‘catch up contributions’?
Carry-forward contributions allow super fund members to use any of their unused concessional contributions limit (or cap) on a rolling basis for five years.
This means if you don’t use the full amount of your concessional contribution cap ($25,000 in both 2018/2019 and 2019/2020), you can carry-forward the unused amount and take advantage of it up to five years later.
Am I eligible?
- An annual cap of $25,000 applies to concessional contributions (applies in 2018/19 and may be indexed in future years).
- Your total superfund balance on the previous June 30 must be less than $500,000 for you to be eligible for concessional catch-up contributions
- If you’re aged between 65 and 74 you will need to meet the work test to make concessional contributions to your superfund (40 hours of paid work in any consecutive 30-day period that financial year).
- You cannot make voluntary concessional contributions once you reach the age of 75.
Catch Up Contributions: A Case Study
Amy is a 57-year-old earning $100,000 a year.
In 2018/19, she makes total concessional superannuation contributions of $10,000 with a total super balance of less than $500,000 on June 30, 2019.
This means that in 2019/20, she has the ability to make concessional contributions of up to $40,000 into her superannuation fund. Of that, $25,000 is her annual concessional cap and $15,000 is her unused amount from 2018/19, which has been carried forward.
The full $40,000 will be taxed at up to 15% in her superannuation fund.
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