With the end of the financial year approaching fast, Australians have a limited window to take advantage of a superannuation tax strategy that could significantly boost their retirement savings.
By using the carry forward concessional contributions rule, eligible Aussies may not only reduce their tax bill but also increase their super balance by up to $80,000 over time.
What Is the Superannuation Carry Forward Rule?
The carry forward concessional contribution rule allows individuals to use any unused concessional cap space from the last five financial years, starting from 2018–19. But after July 1, 2025, the unused cap from 2019–20 will expire permanently.
To be eligible:
- You must have had a total super balance under $500,000 as of June 30, 2024.
- You can carry forward unused concessional contributions from up to five previous financial years.
This means you can contribute more than the current concessional cap (which is $30,000 for 2024–25), without incurring additional tax penalties.
Real-World Example of the Benefit
According to Vanguard’s Renae Smith:
“If someone only contributed $15,000 in 2019–20 (when the cap was $25,000), they may now contribute an additional $10,000 this year on top of the current $30,000 cap, allowing them to contribute up to $40,000 in total.”
Key Facts on Superannuation Carry Forward Strategy
| Category | Details |
|---|---|
| Annual Concessional Cap (2024–25) | $30,000 |
| Eligibility Threshold | Super balance below $500,000 as of June 30, 2024 |
| Carry Forward Applies From | 2018–19 financial year |
| Carry Forward Expires For | 2019–20 cap expires after June 30, 2025 |
| Tax Rate on Contributions | 15% |
| How to Claim Deduction | Submit ‘Notice of Intent’ form to super fund before tax return |
| Potential Retirement Boost | Up to $79,856 from $1,000 yearly contributions over 15 years |
Why Is This Strategy So Valuable?
This superannuation tax deduction strategy can lower taxable income and grow wealth through compound returns. Here’s an example:
- A 30-year-old earning $80,000 makes a $1,000 voluntary super contribution.
- They claim a tax deduction and get $320 in tax back.
- After the 15% contribution tax, $850 goes into their super fund.
- If repeated annually for 15 years, this can grow to $79,856 by age 67.
Who Should Consider This Strategy?
This tax strategy is most beneficial for:
- Middle to high-income earners, especially those paying a marginal tax rate higher than 15%.
- Self-employed individuals looking for legitimate ways to reduce taxable income.
- Young Australians who want to build wealth steadily over time.
- Those earning below $60,400, as they may also qualify for the government super co-contribution of up to $500.
Things to Be Cautious About
While the benefits are clear, this strategy may not suit everyone. Keep in mind:
- High-interest debts like credit cards may be more urgent to pay off.
- Funds locked in super are not accessible until retirement, so consider liquidity needs.
- Exceeding the concessional cap may lead to additional tax liabilities.
- Be sure to check total contributions made by your employer before adding voluntary amounts.
How to Make and Claim Super Contributions
To benefit from this tax-saving tactic:
- Check your unused concessional cap via ATO’s myGov portal.
- Calculate your total contributions made so far in this financial year.
- Make a voluntary contribution from your post-tax income.
- Fill out and submit a ‘Notice of Intent to Claim a Deduction’ form to your super fund.
- Lodge your tax return, reflecting the deduction.
Timing is critical – make your contributions and submit the notice at least one week before June 30 to ensure processing before EOFY.
Final Reminder: Deadline Looming
With June 30, 2025, fast approaching, Australians looking to boost their retirement fund and claim valuable tax deductions must act now. After that date, carry-forward amounts from 2019–20 will no longer be available.
The superannuation carry forward contribution rule is one of the most underused financial opportunities available to Australians.
For those with a super balance under $500,000, this strategy offers a powerful way to reduce tax and grow your retirement nest egg. But time is running out—act before June 30 to lock in potentially thousands of dollars in future gains.
FAQs
Who is eligible to carry forward unused concessional contributions?
To be eligible, your total superannuation balance must be below $500,000 as of June 30 of the previous financial year.
What happens if I exceed the concessional contributions cap?
You may be liable to pay extra tax, including interest charges, on the excess amount.
Can I access the super contributions before retirement?
No, voluntary super contributions are preserved until you meet a condition of release, such as retirement or reaching your preservation age.