Carry-Forward Concessional Contributions

Did you know you could be sitting on a superannuation goldmine and not even know it?

It’s called carry-forward concessional contributions, and if you’re not using it, you’re missing

out on serious tax savings. Here’s a quick rundown to get you on the path to tax-free

success.

What Are Carry-Forward Concessional Contributions?

In simple terms, carry-forward contributions let you catch up on unused concessional

contribution caps from previous years. These caps accumulate for up to five years and can

be added to your current years cap, letting you contribute more into super and save on taxes.

How Does It Work?

You can only carry forward unused contributions if your total super balance is under $500,000 as of June 30 of the previous financial year. If you’re under 75, there’s no age restriction on using carry-forward contributions. However, if you’re between 67 and 75, you’ll need to pass the work test (or exemption) to make personal concessional contributions.

How Much Can You Contribute?

Let’s say you’ve been slacking a bit on your contributions for the last few years. In 2024/25,

you could catch up by using all the unused cap from previous years.

2019/20: $10,000 unused

2020/21: $10,000 unused

2021/22: $10,000 unused

2022/23: $10,000 unused

2023/24: $5,000 unused

That’s $50,000 you can add to your $30,000 cap for 2024/25, making it $80,000 in total. You

can contribute all of this — just make sure it fits with your tax situation.

Tax Savings Example

If you earn $100,000 and contribute an extra $68,500 using the carry-forward rule, here’s

how your taxes change:

Without extra contributions: Tax: $22,788

With extra contributions: Tax: $12,253

Tax saving: $10,535 — that's a serious win.

Benefits of Carry-Forward Contributions

- Lower taxable income: The more you contribute, the less tax you pay.

- More super savings: Your super fund is a tax haven, with tax on earnings capped at

15%.

- Potential CGT savings: Sell an asset and make contributions — reduce your capital

gains tax.

- Transition to retirement: Extra contributions help if you are planning a transition to

retirement strategy.

Risks of Carry-Forward Contributions

- Contribution tax: You’ll pay 15% tax on concessional contributions (30% for very

high earners).

- Inaccessibility: Once it’s in your super, you can’t touch it until you meet a condition

of release (like retirement).

- Market volatility: Contributions are invested, so there’s always a risk of market

fluctuations.

- Exceeding the cap: Going over the cap can trigger excess contribution tax.

Should You Use Carry-Forward Contributions?

If your additional contributions reduce your overall tax bill, it’s probably a no-brainer. But

remember, it’s not just about tax — consider accessibility, investment risks, and your

cash flow before making big contributions. And, as always, consult a professional to make

sure you’re on track!