Today I’m covering the topic of concessional contributions for superannuation. It’s quite complex and detailed – please feel free to get in touch if you’d like to explore whether you can access this opportunity.

Concessional contributions can be broken down to parts:

1.      General concessional contributions cap

• From 1 July 2017 the general concessional contributions cap is $25,000. This is indexed in line with average weekly ordinary time earnings in increments of $2,500.

• From the 2017–18 financial year, the general concessional contributions cap is not calculated based on age.

2.      Carry forward of unused concessional cap

• From 1 July 2018, if your total superannuation balance is less than $500,000 on 30 June of the previous financial year, you may be able to contribute more than the general concessional contributions cap.

• And, you may be entitled to make additional concessional contributions for any unused amounts.

• 2019-20 is the first year you will be entitled to carry forward unused amounts.

• Unused amounts are available for a maximum of five years.

Now, I’m aware this is all quite wordy and will differ for every individual, so I have a real-life example for you.

A client and I recently looked into her superannuation concessional contribution options.

Based on the amount of previous contributions she can apply any unused cumulative concessional contributions from the 2018/19 financial year and onwards.

Her unused concessional contributions total $23,107.

• $10,779 from 2018/19

and 

• $12,328 from 2019/20           

Unfortunately, she can’t use her unused concessional contributions prior to July 2018.

This means she can make a concessional contribution of $23,107 during the remainder of this financial year - before 30 June 2020.

Or she can make a lump sum concessional contribution of $48,107 post July 2020 because an additional $25,000 becomes available for the 2020/21 financial year:

• $23,107 + $25,000 = $48,107

However, as this also includes her employer contribution, I suggested she make the $23,107 contribution before June 30 2020

There are many ways to reduce your tax liability, increase your super contributions and reduce your personal income tax. Please give me a call if you would like to discuss concessional contributions and determine the best action to take now and in the future.

Your financial wellbeing matters!

Natallia Smith

Director

TruWealth Advice

General Advice Warning: The information in this communication is provided for information purposes and is of a general nature only. It is not intended to be and does not constitute financial advice or any other advice. Further, the information is not based on your personal objectives, financial situation or needs. You are encouraged to consult a financial planner before making any decision as to how appropriate this information is to your objectives, financial situation and needs. Also, before making a decision, you should consider the relevant Product Disclosure Statement available from your financial planner.