Taxation & Estate Planning
To use or defer concessional super contributions
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With the ability to use catch-up concessional contributions starting from 1 July 2019, we've been asked the following question by an adviser:

If my client realises a large capital gain next financial year, should they defer using their concessional contributions cap this year and take advantage of the catch-up concessional contributions next year when they will have more assessable income?

Before looking at the detail, let's look at the rules in relation to catch-up concessional contributions.

From 1 July 2018, clients can carry forward any unused amounts of their concessional contributions cap. The unused amounts will be carried forward on a rolling basis for five years. From 1 July 2019, providing their total super balance at 30 June of the previous financial year is less than $500,000, they can utilise the unused concessional contributions in addition to the standard concessional contributions cap. Any unused concessional contributions prior to 1 July 2018 cannot be carried forward.

Example

Declan is an employee and receives $10,000 of employer contributions in the 2018/19 financial year. He makes no additional concessional contributions. Declan has $15,000 of unused concessional contributions cap in the 2018/19 financial year which can be carried forward for five years. In the 2019/20 financial year, Declan can have total concessional contributions of $40,000. This consists of the annual concessional contributions cap of $25,000 for 2019/20 and $15,000 of the unused concessional contributions cap from the 2018/19 financial year.

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