The carry forward provision

A superannuation fund, or ‘super’, is a powerful investment tool to help you save money for retirement. However, saving money in a super fund is usually connected to employment – and therefore, these funds tend to favour people with regular, fixed salaries.

For instance, if you work part-time, are self-employed and/or your income fluctuates during the year, it can result in periods where you make few or no superannuation contributions. Over time, these breaks can have an effect on your super fund balance.

With this in mind, from 1 July 2018, a carry forward provision now applies for the concessional contributions cap. This provision gives you the opportunity to ‘catch up’ – in other words, make up for any gaps in saving by making additional contributions – if you have the ability and desire to do so.

Here are some important details to be aware of:

  • You can now carry forward any unused concessional contributions cap amounts on a rolling basis for up to five years. After five years, any amounts not utilised will expire.
  • The 2019-20 financial year is the first year in which you will be able to make additional concessional contributions. To qualify, you must:
  • Be under age 65, or be between 65 and 74 and meet the work test
  • Have unused concessional contributions cap amounts from one or more of the previous five financial years, beginning with the 2018-19 financial year
  • Have a total super fund balance of less than $500,000 for the year in which you make additional contributions.

Note: Your total balance is your total superannuation balance immediately preceding the financial year. Once your total balance exceeds $500,000, the general concessional contributions cap will still apply; however, the carry forward provision will no longer be available (unless the total balance drops below $500,000).

Before proceeding with the carry forward provision, it’s important that you seek advice from a professional financial advisor to discuss eligibility and ensure that taking advantage of this option is appropriate for your financial situation, as well as your long-term financial goals and objectives.

Want to speak with an SMSF professional about the carry forward provision? Contact the experts at Accru Harris Orchard today.

Disclaimer: The information contained in this article is based on information believed to be accurate and reliable at the time of publication. To the extent permissible by law, neither we nor any of our related entities, employees, or directors gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of information contained in this blog. This information is of a general nature only. It is not intended as personal advice and does not take into account the particular investment objectives, financial situation and needs of a particular investor. Before making an investment decision you should speak with your financial planner to assess whether the advice is appropriate to your particular investment objectives, financial situation and needs.

About the Author

Sam Facy
Sam was always good with numbers: he even won the inaugural accounting prize at school. Adelaide being Adelaide, his father knew someone, which meant a part-time accounting job at an early age.

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